Correlation Between Computer and LG Display
Can any of the company-specific risk be diversified away by investing in both Computer 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 Computer and LG Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Computer And Technologies and LG Display Co, you can compare the effects of market volatilities on Computer 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 Computer with a short position of LG Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Computer and LG Display.
Diversification Opportunities for Computer and LG Display
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Computer and LGA is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Computer And Technologies and LG Display Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Display and Computer 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 Computer And Technologies 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 Computer i.e., Computer and LG Display go up and down completely randomly.
Pair Corralation between Computer and LG Display
Assuming the 90 days horizon Computer And Technologies is expected to under-perform the LG Display. But the stock apears to be less risky and, when comparing its historical volatility, Computer And Technologies is 1.19 times less risky than LG Display. The stock trades about -0.14 of its potential returns per unit of risk. The LG Display Co is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 358.00 in LG Display Co on September 3, 2024 and sell it today you would lose (30.00) from holding LG Display Co or give up 8.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Computer And Technologies vs. LG Display Co
Performance |
| Timeline |
| Computer And Technologies |
| LG Display |
Computer and LG Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Computer and LG Display
The main advantage of trading using opposite Computer and LG Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Computer 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.| Computer vs. International Business Machines | Computer vs. FUJITSU LTD ADR | Computer vs. Superior Plus Corp | Computer vs. NMI Holdings |
| LG Display vs. Apple Inc | LG Display vs. Samsung Electronics Co | LG Display vs. Samsung Electronics Co | LG Display vs. Sony Group |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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