Correlation Between LG Display and Office Properties
Can any of the company-specific risk be diversified away by investing in both LG Display and Office Properties 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 Office Properties 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 Office Properties Income, you can compare the effects of market volatilities on LG Display and Office Properties 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 Office Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Display and Office Properties.
Diversification Opportunities for LG Display and Office Properties
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between LGA and Office is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding LG Display Co and Office Properties Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Office Properties Income 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 Office Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Office Properties Income has no effect on the direction of LG Display i.e., LG Display and Office Properties go up and down completely randomly.
Pair Corralation between LG Display and Office Properties
Assuming the 90 days horizon LG Display Co is expected to generate 0.16 times more return on investment than Office Properties. However, LG Display Co is 6.14 times less risky than Office Properties. It trades about -0.16 of its potential returns per unit of risk. Office Properties Income is currently generating about -0.16 per unit of risk. If you would invest 344.00 in LG Display Co on August 25, 2024 and sell it today you would lose (18.00) from holding LG Display Co or give up 5.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Display Co vs. Office Properties Income
Performance |
| Timeline |
| LG Display |
| Office Properties Income |
LG Display and Office Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Display and Office Properties
The main advantage of trading using opposite LG Display and Office Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Display position performs unexpectedly, Office Properties 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 Office Properties will offset losses from the drop in Office Properties' 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 |
| Office Properties vs. CDN IMPERIAL BANK | Office Properties vs. Quaker Chemical | Office Properties vs. Sanyo Chemical Industries | Office Properties vs. TIANDE CHEMICAL |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |