Correlation Between Shinhan Inverse and LG Display
Can any of the company-specific risk be diversified away by investing in both Shinhan Inverse and LG Display at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Shinhan Inverse and LG Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shinhan Inverse Copper and LG Display Co, you can compare the effects of market volatilities on Shinhan Inverse and LG Display and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Shinhan Inverse with a short position of LG Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan Inverse and LG Display.
Diversification Opportunities for Shinhan Inverse and LG Display
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Shinhan and 034220 is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Inverse Copper and LG Display Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Display and Shinhan Inverse is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Shinhan Inverse Copper are associated (or correlated) with LG Display. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Display has no effect on the direction of Shinhan Inverse i.e., Shinhan Inverse and LG Display go up and down completely randomly.
Pair Corralation between Shinhan Inverse and LG Display
Assuming the 90 days trading horizon Shinhan Inverse Copper is expected to under-perform the LG Display. But the stock apears to be less risky and, when comparing its historical volatility, Shinhan Inverse Copper is 2.22 times less risky than LG Display. The stock trades about -0.12 of its potential returns per unit of risk. The LG Display Co is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 964,000 in LG Display Co on September 14, 2024 and sell it today you would lose (12,000) from holding LG Display Co or give up 1.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.91% |
| Values | Daily Returns |
Shinhan Inverse Copper vs. LG Display Co
Performance |
| Timeline |
| Shinhan Inverse Copper |
| LG Display |
Shinhan Inverse and LG Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan Inverse and LG Display
The main advantage of trading using opposite Shinhan Inverse and LG Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan Inverse position performs unexpectedly, LG Display can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in LG Display will offset losses from the drop in LG Display's long position.| Shinhan Inverse vs. FoodNamoo | Shinhan Inverse vs. FOODWELL Co | Shinhan Inverse vs. SS TECH | Shinhan Inverse vs. Cots Technology Co |
| LG Display vs. Samsung Electronics Co | LG Display vs. Samsung Electronics Co | LG Display vs. SK Hynix | LG Display vs. POSCO Holdings |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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