Correlation Between Haleon PLC and LG Display
Can any of the company-specific risk be diversified away by investing in both Haleon PLC 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 Haleon PLC and LG Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Haleon PLC and LG Display Co, you can compare the effects of market volatilities on Haleon PLC 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 Haleon PLC with a short position of LG Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Haleon PLC and LG Display.
Diversification Opportunities for Haleon PLC and LG Display
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Haleon and LGA is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Haleon PLC and LG Display Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Display and Haleon PLC 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 Haleon PLC 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 Haleon PLC i.e., Haleon PLC and LG Display go up and down completely randomly.
Pair Corralation between Haleon PLC and LG Display
Assuming the 90 days horizon Haleon PLC is expected to generate 1.31 times more return on investment than LG Display. However, Haleon PLC is 1.31 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 -0.11 per unit of risk. If you would invest 885.00 in Haleon PLC on September 4, 2024 and sell it today you would lose (5.00) from holding Haleon PLC or give up 0.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Haleon PLC vs. LG Display Co
Performance |
| Timeline |
| Haleon PLC |
| LG Display |
Haleon PLC and LG Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Haleon PLC and LG Display
The main advantage of trading using opposite Haleon PLC and LG Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Haleon PLC 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.| Haleon PLC vs. Merck KGaA | Haleon PLC vs. Superior Plus Corp | Haleon PLC vs. NMI Holdings | Haleon PLC vs. Origin Agritech |
| 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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