Correlation Between Globe Trade and LG Display
Can any of the company-specific risk be diversified away by investing in both Globe Trade 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 Globe Trade and LG Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Globe Trade Centre and LG Display Co, you can compare the effects of market volatilities on Globe Trade 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 Globe Trade with a short position of LG Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globe Trade and LG Display.
Diversification Opportunities for Globe Trade and LG Display
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Globe and LGA is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Globe Trade Centre and LG Display Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Display and Globe Trade 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 Globe Trade Centre 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 Globe Trade i.e., Globe Trade and LG Display go up and down completely randomly.
Pair Corralation between Globe Trade and LG Display
Assuming the 90 days trading horizon Globe Trade Centre is expected to generate 1.35 times more return on investment than LG Display. However, Globe Trade is 1.35 times more volatile than LG Display Co. It trades about 0.01 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 92.00 in Globe Trade Centre on November 3, 2024 and sell it today you would earn a total of 1.00 from holding Globe Trade Centre or generate 1.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Globe Trade Centre vs. LG Display Co
Performance |
| Timeline |
| Globe Trade Centre |
| LG Display |
Globe Trade and LG Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Globe Trade and LG Display
The main advantage of trading using opposite Globe Trade and LG Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globe Trade 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.| Globe Trade vs. Apple Inc | Globe Trade vs. Apple Inc | Globe Trade vs. Apple Inc | Globe Trade vs. Apple Inc |
| LG Display vs. Apple Inc | LG Display vs. Samsung Electronics Co | LG Display vs. Samsung Electronics Co | LG Display vs. Sony Group 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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