Correlation Between LG Display and GAMING FAC
Can any of the company-specific risk be diversified away by investing in both LG Display and GAMING FAC 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 GAMING FAC 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 GAMING FAC SA, you can compare the effects of market volatilities on LG Display and GAMING FAC 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 GAMING FAC. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Display and GAMING FAC.
Diversification Opportunities for LG Display and GAMING FAC
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between LGA and GAMING is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding LG Display Co and GAMING FAC SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GAMING FAC SA 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 GAMING FAC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GAMING FAC SA has no effect on the direction of LG Display i.e., LG Display and GAMING FAC go up and down completely randomly.
Pair Corralation between LG Display and GAMING FAC
Assuming the 90 days horizon LG Display Co is expected to under-perform the GAMING FAC. But the stock apears to be less risky and, when comparing its historical volatility, LG Display Co is 1.49 times less risky than GAMING FAC. The stock trades about -0.03 of its potential returns per unit of risk. The GAMING FAC SA is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 120.00 in GAMING FAC SA on November 6, 2024 and sell it today you would earn a total of 107.00 from holding GAMING FAC SA or generate 89.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Display Co vs. GAMING FAC SA
Performance |
| Timeline |
| LG Display |
| GAMING FAC SA |
LG Display and GAMING FAC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Display and GAMING FAC
The main advantage of trading using opposite LG Display and GAMING FAC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Display position performs unexpectedly, GAMING FAC 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 GAMING FAC will offset losses from the drop in GAMING FAC's long position.| LG Display vs. CHEMICAL INDUSTRIES | LG Display vs. Guidewire Software | LG Display vs. TIANDE CHEMICAL | LG Display vs. Mitsui Chemicals |
| GAMING FAC vs. Martin Marietta Materials | GAMING FAC vs. PLANT VEDA FOODS | GAMING FAC vs. Austevoll Seafood ASA | GAMING FAC vs. Performance Food Group |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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