Correlation Between AVITA Medical and LG Display
Can any of the company-specific risk be diversified away by investing in both AVITA Medical 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 AVITA Medical and LG Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AVITA Medical and LG Display Co, you can compare the effects of market volatilities on AVITA Medical 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 AVITA Medical with a short position of LG Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of AVITA Medical and LG Display.
Diversification Opportunities for AVITA Medical and LG Display
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between AVITA and LGA is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding AVITA Medical and LG Display Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Display and AVITA Medical 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 AVITA Medical 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 AVITA Medical i.e., AVITA Medical and LG Display go up and down completely randomly.
Pair Corralation between AVITA Medical and LG Display
Assuming the 90 days trading horizon AVITA Medical is expected to generate 3.85 times more return on investment than LG Display. However, AVITA Medical is 3.85 times more volatile than LG Display Co. It trades about 0.25 of its potential returns per unit of risk. LG Display Co is currently generating about -0.15 per unit of risk. If you would invest 186.00 in AVITA Medical on August 31, 2024 and sell it today you would earn a total of 48.00 from holding AVITA Medical or generate 25.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AVITA Medical vs. LG Display Co
Performance |
| Timeline |
| AVITA Medical |
| LG Display |
AVITA Medical and LG Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AVITA Medical and LG Display
The main advantage of trading using opposite AVITA Medical and LG Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AVITA Medical 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.| AVITA Medical vs. Apple Inc | AVITA Medical vs. Apple Inc | AVITA Medical vs. Apple Inc | AVITA Medical vs. Apple Inc |
| LG Display vs. SK TELECOM TDADR | LG Display vs. Rogers Communications | LG Display vs. Entravision Communications | LG Display vs. Singapore Telecommunications Limited |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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