Correlation Between Information Services and LG Display
Can any of the company-specific risk be diversified away by investing in both Information Services 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 Information Services and LG Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Information Services International Dentsu and LG Display Co, you can compare the effects of market volatilities on Information Services 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 Information Services with a short position of LG Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Information Services and LG Display.
Diversification Opportunities for Information Services and LG Display
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Information and LGA is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Information Services Internati and LG Display Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Display and Information Services 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 Information Services International Dentsu 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 Information Services i.e., Information Services and LG Display go up and down completely randomly.
Pair Corralation between Information Services and LG Display
Assuming the 90 days horizon Information Services International Dentsu is expected to generate 0.85 times more return on investment than LG Display. However, Information Services International Dentsu is 1.18 times less risky than LG Display. It trades about 0.01 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 3,420 in Information Services International Dentsu on September 4, 2024 and sell it today you would lose (20.00) from holding Information Services International Dentsu or give up 0.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Information Services Internati vs. LG Display Co
Performance |
| Timeline |
| Information Services |
| LG Display |
Information Services and LG Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Information Services and LG Display
The main advantage of trading using opposite Information Services and LG Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Information Services 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.| Information Services vs. FUJITSU LTD ADR | Information Services vs. Superior Plus Corp | Information Services vs. NMI Holdings | Information Services 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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