Correlation Between Gamma Communications and LG Display
Can any of the company-specific risk be diversified away by investing in both Gamma Communications 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 Gamma Communications and LG Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gamma Communications plc and LG Display Co, you can compare the effects of market volatilities on Gamma Communications 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 Gamma Communications with a short position of LG Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gamma Communications and LG Display.
Diversification Opportunities for Gamma Communications and LG Display
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Gamma and LGA is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Gamma Communications plc and LG Display Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Display and Gamma Communications 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 Gamma Communications plc 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 Gamma Communications i.e., Gamma Communications and LG Display go up and down completely randomly.
Pair Corralation between Gamma Communications and LG Display
Assuming the 90 days horizon Gamma Communications plc is expected to under-perform the LG Display. In addition to that, Gamma Communications is 1.02 times more volatile than LG Display Co. It trades about -0.06 of its total potential returns per unit of risk. LG Display Co is currently generating about -0.05 per unit of volatility. If you would invest 340.00 in LG Display Co on August 28, 2024 and sell it today you would lose (6.00) from holding LG Display Co or give up 1.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gamma Communications plc vs. LG Display Co
Performance |
| Timeline |
| Gamma Communications plc |
| LG Display |
Gamma Communications and LG Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gamma Communications and LG Display
The main advantage of trading using opposite Gamma Communications and LG Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gamma Communications 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.| Gamma Communications vs. QINGCI GAMES INC | Gamma Communications vs. TROPHY GAMES DEV | Gamma Communications vs. GigaMedia | Gamma Communications vs. Perseus Mining Limited |
| LG Display vs. DXC Technology Co | LG Display vs. Vishay Intertechnology | LG Display vs. SOUTHWEST AIRLINES | LG Display vs. Cars Inc |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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