Correlation Between LG Display and CN MODERN
Can any of the company-specific risk be diversified away by investing in both LG Display and CN MODERN 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 LG Display and CN MODERN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Display Co and CN MODERN DAIRY, you can compare the effects of market volatilities on LG Display and CN MODERN 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 LG Display with a short position of CN MODERN. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Display and CN MODERN.
Diversification Opportunities for LG Display and CN MODERN
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between LGA and 07M is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding LG Display Co and CN MODERN DAIRY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CN MODERN DAIRY and LG Display 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 LG Display Co are associated (or correlated) with CN MODERN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CN MODERN DAIRY has no effect on the direction of LG Display i.e., LG Display and CN MODERN go up and down completely randomly.
Pair Corralation between LG Display and CN MODERN
Assuming the 90 days horizon LG Display Co is expected to under-perform the CN MODERN. But the stock apears to be less risky and, when comparing its historical volatility, LG Display Co is 2.67 times less risky than CN MODERN. The stock trades about -0.14 of its potential returns per unit of risk. The CN MODERN DAIRY is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 9.25 in CN MODERN DAIRY on October 30, 2024 and sell it today you would earn a total of 1.75 from holding CN MODERN DAIRY or generate 18.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Display Co vs. CN MODERN DAIRY
Performance |
| Timeline |
| LG Display |
| CN MODERN DAIRY |
LG Display and CN MODERN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Display and CN MODERN
The main advantage of trading using opposite LG Display and CN MODERN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Display position performs unexpectedly, CN MODERN 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 CN MODERN will offset losses from the drop in CN MODERN's long position.| LG Display vs. HANOVER INSURANCE | LG Display vs. MAVEN WIRELESS SWEDEN | LG Display vs. Insurance Australia Group | LG Display vs. Reinsurance Group of |
| CN MODERN vs. CHAMPION IRON | CN MODERN vs. Coffee Holding Co | CN MODERN vs. Micron Technology | CN MODERN vs. Check Point Software |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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