Correlation Between VIVA WINE and LG Display
Can any of the company-specific risk be diversified away by investing in both VIVA WINE 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 VIVA WINE and LG Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VIVA WINE GROUP and LG Display Co, you can compare the effects of market volatilities on VIVA WINE 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 VIVA WINE with a short position of LG Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of VIVA WINE and LG Display.
Diversification Opportunities for VIVA WINE and LG Display
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between VIVA and LGA is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding VIVA WINE 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 VIVA WINE 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 VIVA WINE 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 VIVA WINE i.e., VIVA WINE and LG Display go up and down completely randomly.
Pair Corralation between VIVA WINE and LG Display
Assuming the 90 days horizon VIVA WINE GROUP is expected to under-perform the LG Display. But the stock apears to be less risky and, when comparing its historical volatility, VIVA WINE GROUP is 1.25 times less risky than LG Display. The stock trades about -0.1 of its potential returns per unit of risk. The LG Display Co is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 366.00 in LG Display Co on August 29, 2024 and sell it today you would lose (38.00) from holding LG Display Co or give up 10.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
VIVA WINE GROUP vs. LG Display Co
Performance |
| Timeline |
| VIVA WINE GROUP |
| LG Display |
VIVA WINE and LG Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VIVA WINE and LG Display
The main advantage of trading using opposite VIVA WINE and LG Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VIVA WINE 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.| VIVA WINE vs. Corporate Office Properties | VIVA WINE vs. KB HOME | VIVA WINE vs. Tri Pointe Homes | VIVA WINE vs. AUSTEVOLL SEAFOOD |
| LG Display vs. JAPAN TOBACCO UNSPADR12 | LG Display vs. Grupo Carso SAB | LG Display vs. XLMedia PLC | LG Display vs. Dave Busters Entertainment |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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