Correlation Between LG Display and Copa Holdings
Can any of the company-specific risk be diversified away by investing in both LG Display and Copa Holdings 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 Copa Holdings 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 Copa Holdings SA, you can compare the effects of market volatilities on LG Display and Copa Holdings 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 Copa Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Display and Copa Holdings.
Diversification Opportunities for LG Display and Copa Holdings
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between LGA and Copa is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding LG Display Co and Copa Holdings SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Copa Holdings 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 Copa Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Copa Holdings SA has no effect on the direction of LG Display i.e., LG Display and Copa Holdings go up and down completely randomly.
Pair Corralation between LG Display and Copa Holdings
Assuming the 90 days horizon LG Display Co is expected to under-perform the Copa Holdings. But the stock apears to be less risky and, when comparing its historical volatility, LG Display Co is 1.24 times less risky than Copa Holdings. The stock trades about -0.06 of its potential returns per unit of risk. The Copa Holdings SA is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 7,950 in Copa Holdings SA on September 3, 2024 and sell it today you would earn a total of 1,000.00 from holding Copa Holdings SA or generate 12.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Display Co vs. Copa Holdings SA
Performance |
| Timeline |
| LG Display |
| Copa Holdings SA |
LG Display and Copa Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Display and Copa Holdings
The main advantage of trading using opposite LG Display and Copa Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Display position performs unexpectedly, Copa Holdings 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 Copa Holdings will offset losses from the drop in Copa Holdings' long position.| LG Display vs. Apple Inc | LG Display vs. Samsung Electronics Co | LG Display vs. Samsung Electronics Co | LG Display vs. Sony Group |
| Copa Holdings vs. Tower Semiconductor | Copa Holdings vs. PLAY2CHILL SA ZY | Copa Holdings vs. ON SEMICONDUCTOR | Copa Holdings vs. LG Display Co |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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