Correlation Between LG Display and Daito Trust
Can any of the company-specific risk be diversified away by investing in both LG Display and Daito Trust 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 Daito Trust 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 Daito Trust Construction, you can compare the effects of market volatilities on LG Display and Daito Trust 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 Daito Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Display and Daito Trust.
Diversification Opportunities for LG Display and Daito Trust
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between LGA and Daito is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding LG Display Co and Daito Trust Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daito Trust Construction 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 Daito Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daito Trust Construction has no effect on the direction of LG Display i.e., LG Display and Daito Trust go up and down completely randomly.
Pair Corralation between LG Display and Daito Trust
Assuming the 90 days horizon LG Display Co is expected to under-perform the Daito Trust. In addition to that, LG Display is 1.57 times more volatile than Daito Trust Construction. It trades about -0.16 of its total potential returns per unit of risk. Daito Trust Construction is currently generating about 0.18 per unit of volatility. If you would invest 9,950 in Daito Trust Construction on August 25, 2024 and sell it today you would earn a total of 350.00 from holding Daito Trust Construction or generate 3.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Display Co vs. Daito Trust Construction
Performance |
| Timeline |
| LG Display |
| Daito Trust Construction |
LG Display and Daito Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Display and Daito Trust
The main advantage of trading using opposite LG Display and Daito Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Display position performs unexpectedly, Daito Trust 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 Daito Trust will offset losses from the drop in Daito Trust's long position.| LG Display vs. AIR PRODCHEMICALS | LG Display vs. Sekisui Chemical Co | LG Display vs. Mitsubishi Gas Chemical | LG Display vs. JAPAN TOBACCO UNSPADR12 |
| Daito Trust vs. COSTAR GROUP INC | Daito Trust vs. CBRE Group Class | Daito Trust vs. VONOVIA SE ADR | Daito Trust vs. Vonovia SE |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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