Correlation Between Charter Communications and LG Display
Can any of the company-specific risk be diversified away by investing in both Charter 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 Charter 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 Charter Communications and LG Display Co, you can compare the effects of market volatilities on Charter 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 Charter Communications with a short position of LG Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charter Communications and LG Display.
Diversification Opportunities for Charter Communications and LG Display
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Charter and LGA is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Charter Communications and LG Display Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Display and Charter 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 Charter Communications 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 Charter Communications i.e., Charter Communications and LG Display go up and down completely randomly.
Pair Corralation between Charter Communications and LG Display
Assuming the 90 days trading horizon Charter Communications is expected to generate 0.92 times more return on investment than LG Display. However, Charter Communications is 1.08 times less risky than LG Display. It trades about 0.02 of its potential returns per unit of risk. LG Display Co is currently generating about -0.03 per unit of risk. If you would invest 35,010 in Charter Communications on September 4, 2024 and sell it today you would earn a total of 2,855 from holding Charter Communications or generate 8.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Charter Communications vs. LG Display Co
Performance |
| Timeline |
| Charter Communications |
| LG Display |
Charter Communications and LG Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charter Communications and LG Display
The main advantage of trading using opposite Charter Communications and LG Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charter 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.| Charter Communications vs. Apple Inc | Charter Communications vs. Apple Inc | Charter Communications vs. Apple Inc | Charter Communications vs. Apple Inc |
| LG Display vs. Apple Inc | LG Display vs. Samsung Electronics Co | LG Display vs. Xiaomi | LG Display vs. Panasonic Corp |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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