Correlation Between Hisense Home and LG Display
Can any of the company-specific risk be diversified away by investing in both Hisense Home 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 Hisense Home and LG Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hisense Home Appliances and LG Display Co, you can compare the effects of market volatilities on Hisense Home 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 Hisense Home with a short position of LG Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hisense Home and LG Display.
Diversification Opportunities for Hisense Home and LG Display
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Hisense and LGA is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Hisense Home Appliances and LG Display Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Display and Hisense Home 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 Hisense Home Appliances 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 Hisense Home i.e., Hisense Home and LG Display go up and down completely randomly.
Pair Corralation between Hisense Home and LG Display
Assuming the 90 days horizon Hisense Home Appliances is expected to under-perform the LG Display. In addition to that, Hisense Home is 2.35 times more volatile than LG Display Co. It trades about -0.14 of its total potential returns per unit of risk. LG Display Co is currently generating about -0.15 per unit of volatility. If you would invest 348.00 in LG Display Co on August 31, 2024 and sell it today you would lose (14.00) from holding LG Display Co or give up 4.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Hisense Home Appliances vs. LG Display Co
Performance |
| Timeline |
| Hisense Home Appliances |
| LG Display |
Hisense Home and LG Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hisense Home and LG Display
The main advantage of trading using opposite Hisense Home and LG Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hisense Home 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.| Hisense Home vs. SERI INDUSTRIAL EO | Hisense Home vs. SOUTHWEST AIRLINES | Hisense Home vs. Gol Intelligent Airlines | Hisense Home vs. Scandinavian Tobacco Group |
| LG Display vs. SK TELECOM TDADR | LG Display vs. Rogers Communications | LG Display vs. Entravision Communications | LG Display vs. Singapore Telecommunications Limited |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas |