Correlation Between G III and LG Display
Can any of the company-specific risk be diversified away by investing in both G III 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 G III and LG Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between G III Apparel Group and LG Display Co, you can compare the effects of market volatilities on G III 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 G III with a short position of LG Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of G III and LG Display.
Diversification Opportunities for G III and LG Display
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GI4 and LGA is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding G III Apparel Group and LG Display Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Display and G III 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 G III Apparel Group 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 G III i.e., G III and LG Display go up and down completely randomly.
Pair Corralation between G III and LG Display
Assuming the 90 days trading horizon G III Apparel Group is expected to generate 1.18 times more return on investment than LG Display. However, G III is 1.18 times more volatile than LG Display Co. It trades about 0.06 of its potential returns per unit of risk. LG Display Co is currently generating about -0.05 per unit of risk. If you would invest 1,840 in G III Apparel Group on September 12, 2024 and sell it today you would earn a total of 1,180 from holding G III Apparel Group or generate 64.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
G III Apparel Group vs. LG Display Co
Performance |
| Timeline |
| G III Apparel |
| LG Display |
G III and LG Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with G III and LG Display
The main advantage of trading using opposite G III and LG Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G III 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.The idea behind G III Apparel Group and LG Display Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| LG Display vs. Samsung Electronics Co | LG Display vs. Samsung Electronics Co | LG Display vs. Sony Group | LG Display vs. Superior Plus 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Stocks Directory Find actively traded stocks across global markets | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences |