Correlation Between LG Display and Davide Campari
Can any of the company-specific risk be diversified away by investing in both LG Display and Davide Campari 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 Davide Campari 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 Davide Campari Milano, you can compare the effects of market volatilities on LG Display and Davide Campari 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 Davide Campari. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Display and Davide Campari.
Diversification Opportunities for LG Display and Davide Campari
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between LGA and Davide is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding LG Display Co and Davide Campari Milano in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Davide Campari Milano 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 Davide Campari. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Davide Campari Milano has no effect on the direction of LG Display i.e., LG Display and Davide Campari go up and down completely randomly.
Pair Corralation between LG Display and Davide Campari
Assuming the 90 days horizon LG Display Co is expected to under-perform the Davide Campari. But the stock apears to be less risky and, when comparing its historical volatility, LG Display Co is 2.66 times less risky than Davide Campari. The stock trades about -0.19 of its potential returns per unit of risk. The Davide Campari Milano is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 606.00 in Davide Campari Milano on September 5, 2024 and sell it today you would lose (31.00) from holding Davide Campari Milano or give up 5.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
LG Display Co vs. Davide Campari Milano
Performance |
| Timeline |
| LG Display |
| Davide Campari Milano |
LG Display and Davide Campari Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Display and Davide Campari
The main advantage of trading using opposite LG Display and Davide Campari positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Display position performs unexpectedly, Davide Campari 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 Davide Campari will offset losses from the drop in Davide Campari's long position.| LG Display vs. Sumitomo Rubber Industries | LG Display vs. Materialise NV | LG Display vs. ADRIATIC METALS LS 013355 | LG Display vs. British American Tobacco |
| Davide Campari vs. ALEFARM BREWING DK 05 | Davide Campari vs. TITAN MACHINERY | Davide Campari vs. DAIRY FARM INTL | Davide Campari vs. Ares Management 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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