Correlation Between LG Display and AIR PRODCHEMICALS
Can any of the company-specific risk be diversified away by investing in both LG Display and AIR PRODCHEMICALS 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 AIR PRODCHEMICALS 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 AIR PRODCHEMICALS, you can compare the effects of market volatilities on LG Display and AIR PRODCHEMICALS 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 AIR PRODCHEMICALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Display and AIR PRODCHEMICALS.
Diversification Opportunities for LG Display and AIR PRODCHEMICALS
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between LGA and AIR is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding LG Display Co and AIR PRODCHEMICALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIR PRODCHEMICALS 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 AIR PRODCHEMICALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIR PRODCHEMICALS has no effect on the direction of LG Display i.e., LG Display and AIR PRODCHEMICALS go up and down completely randomly.
Pair Corralation between LG Display and AIR PRODCHEMICALS
Assuming the 90 days horizon LG Display Co is expected to under-perform the AIR PRODCHEMICALS. In addition to that, LG Display is 1.31 times more volatile than AIR PRODCHEMICALS. It trades about -0.07 of its total potential returns per unit of risk. AIR PRODCHEMICALS is currently generating about 0.26 per unit of volatility. If you would invest 24,756 in AIR PRODCHEMICALS on August 28, 2024 and sell it today you would earn a total of 6,854 from holding AIR PRODCHEMICALS or generate 27.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.46% |
| Values | Daily Returns |
LG Display Co vs. AIR PRODCHEMICALS
Performance |
| Timeline |
| LG Display |
| AIR PRODCHEMICALS |
LG Display and AIR PRODCHEMICALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Display and AIR PRODCHEMICALS
The main advantage of trading using opposite LG Display and AIR PRODCHEMICALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Display position performs unexpectedly, AIR PRODCHEMICALS 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 AIR PRODCHEMICALS will offset losses from the drop in AIR PRODCHEMICALS's long position.| LG Display vs. DXC Technology Co | LG Display vs. Vishay Intertechnology | LG Display vs. SOUTHWEST AIRLINES | LG Display vs. Cars Inc |
| AIR PRODCHEMICALS vs. Apple Inc | AIR PRODCHEMICALS vs. Apple Inc | AIR PRODCHEMICALS vs. Microsoft | AIR PRODCHEMICALS vs. Microsoft |
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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