Correlation Between LG Display and ELECTROLUX
Can any of the company-specific risk be diversified away by investing in both LG Display and ELECTROLUX 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 ELECTROLUX 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 ELECTROLUX B ADR2, you can compare the effects of market volatilities on LG Display and ELECTROLUX 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 ELECTROLUX. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Display and ELECTROLUX.
Diversification Opportunities for LG Display and ELECTROLUX
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between LGA and ELECTROLUX is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding LG Display Co and ELECTROLUX B ADR2 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ELECTROLUX B ADR2 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 ELECTROLUX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ELECTROLUX B ADR2 has no effect on the direction of LG Display i.e., LG Display and ELECTROLUX go up and down completely randomly.
Pair Corralation between LG Display and ELECTROLUX
Assuming the 90 days horizon LG Display Co is expected to generate 0.98 times more return on investment than ELECTROLUX. However, LG Display Co is 1.02 times less risky than ELECTROLUX. It trades about 0.01 of its potential returns per unit of risk. ELECTROLUX B ADR2 is currently generating about -0.03 per unit of risk. If you would invest 328.00 in LG Display Co on September 5, 2024 and sell it today you would lose (8.00) from holding LG Display Co or give up 2.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.22% |
| Values | Daily Returns |
LG Display Co vs. ELECTROLUX B ADR2
Performance |
| Timeline |
| LG Display |
| ELECTROLUX B ADR2 |
LG Display and ELECTROLUX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Display and ELECTROLUX
The main advantage of trading using opposite LG Display and ELECTROLUX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Display position performs unexpectedly, ELECTROLUX 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 ELECTROLUX will offset losses from the drop in ELECTROLUX'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 |
| ELECTROLUX vs. LG Display Co | ELECTROLUX vs. Globe Trade Centre | ELECTROLUX vs. TRADEDOUBLER AB SK | ELECTROLUX vs. Ribbon Communications |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |