Correlation Between LG Display and BYD ELECTRONIC
Can any of the company-specific risk be diversified away by investing in both LG Display and BYD ELECTRONIC 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 BYD ELECTRONIC 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 BYD ELECTRONIC, you can compare the effects of market volatilities on LG Display and BYD ELECTRONIC 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 BYD ELECTRONIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Display and BYD ELECTRONIC.
Diversification Opportunities for LG Display and BYD ELECTRONIC
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between LGA and BYD is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding LG Display Co and BYD ELECTRONIC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BYD ELECTRONIC 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 BYD ELECTRONIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BYD ELECTRONIC has no effect on the direction of LG Display i.e., LG Display and BYD ELECTRONIC go up and down completely randomly.
Pair Corralation between LG Display and BYD ELECTRONIC
Assuming the 90 days horizon LG Display Co is expected to under-perform the BYD ELECTRONIC. But the stock apears to be less risky and, when comparing its historical volatility, LG Display Co is 1.62 times less risky than BYD ELECTRONIC. The stock trades about -0.02 of its potential returns per unit of risk. The BYD ELECTRONIC is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 237.00 in BYD ELECTRONIC on August 31, 2024 and sell it today you would earn a total of 183.00 from holding BYD ELECTRONIC or generate 77.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Display Co vs. BYD ELECTRONIC
Performance |
| Timeline |
| LG Display |
| BYD ELECTRONIC |
LG Display and BYD ELECTRONIC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Display and BYD ELECTRONIC
The main advantage of trading using opposite LG Display and BYD ELECTRONIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Display position performs unexpectedly, BYD ELECTRONIC 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 BYD ELECTRONIC will offset losses from the drop in BYD ELECTRONIC's long position.| LG Display vs. SK TELECOM TDADR | LG Display vs. Rogers Communications | LG Display vs. Entravision Communications | LG Display vs. Singapore Telecommunications Limited |
| BYD ELECTRONIC vs. SIVERS SEMICONDUCTORS AB | BYD ELECTRONIC vs. Darden Restaurants | BYD ELECTRONIC vs. Reliance Steel Aluminum | BYD ELECTRONIC vs. Q2M Managementberatung AG |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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