Correlation Between LG Display and G III
Can any of the company-specific risk be diversified away by investing in both LG Display and G III 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 G III 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 G III Apparel Group, you can compare the effects of market volatilities on LG Display and G III 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 G III. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Display and G III.
Diversification Opportunities for LG Display and G III
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between LGA and GI4 is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding LG Display Co and G III Apparel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G III Apparel 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 G III. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G III Apparel has no effect on the direction of LG Display i.e., LG Display and G III go up and down completely randomly.
Pair Corralation between LG Display and G III
Assuming the 90 days horizon LG Display Co is expected to under-perform the G III. But the stock apears to be less risky and, when comparing its historical volatility, LG Display Co is 1.18 times less risky than G III. The stock trades about -0.05 of its potential returns per unit of risk. The G III Apparel Group is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,840 in G III Apparel Group on September 12, 2024 and sell it today you would earn a total of 1,180 from holding G III Apparel Group or generate 64.13% 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. G III Apparel Group
Performance |
| Timeline |
| LG Display |
| G III Apparel |
LG Display and G III Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Display and G III
The main advantage of trading using opposite LG Display and G III positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Display position performs unexpectedly, G III 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 G III will offset losses from the drop in G III's long position.| LG Display vs. Samsung Electronics Co | LG Display vs. Samsung Electronics Co | LG Display vs. Sony Group | LG Display vs. Superior Plus Corp |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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