Correlation Between LG Display and FEMALE HEALTH
Can any of the company-specific risk be diversified away by investing in both LG Display and FEMALE HEALTH 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 FEMALE HEALTH 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 FEMALE HEALTH, you can compare the effects of market volatilities on LG Display and FEMALE HEALTH 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 FEMALE HEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Display and FEMALE HEALTH.
Diversification Opportunities for LG Display and FEMALE HEALTH
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between LGA and FEMALE is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding LG Display Co and FEMALE HEALTH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FEMALE HEALTH 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 FEMALE HEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FEMALE HEALTH has no effect on the direction of LG Display i.e., LG Display and FEMALE HEALTH go up and down completely randomly.
Pair Corralation between LG Display and FEMALE HEALTH
Assuming the 90 days horizon LG Display Co is expected to generate 0.4 times more return on investment than FEMALE HEALTH. However, LG Display Co is 2.47 times less risky than FEMALE HEALTH. It trades about -0.03 of its potential returns per unit of risk. FEMALE HEALTH is currently generating about -0.04 per unit of risk. If you would invest 520.00 in LG Display Co on August 24, 2024 and sell it today you would lose (194.00) from holding LG Display Co or give up 37.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Display Co vs. FEMALE HEALTH
Performance |
| Timeline |
| LG Display |
| FEMALE HEALTH |
LG Display and FEMALE HEALTH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Display and FEMALE HEALTH
The main advantage of trading using opposite LG Display and FEMALE HEALTH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Display position performs unexpectedly, FEMALE HEALTH 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 FEMALE HEALTH will offset losses from the drop in FEMALE HEALTH's long position.| LG Display vs. AIR PRODCHEMICALS | LG Display vs. Sekisui Chemical Co | LG Display vs. Mitsubishi Gas Chemical | LG Display vs. JAPAN TOBACCO UNSPADR12 |
| FEMALE HEALTH vs. Apple Inc | FEMALE HEALTH vs. Apple Inc | FEMALE HEALTH vs. Apple Inc | FEMALE HEALTH vs. Apple Inc |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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