Correlation Between LG Display and SEB SA
Can any of the company-specific risk be diversified away by investing in both LG Display and SEB SA 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 SEB SA 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 SEB SA, you can compare the effects of market volatilities on LG Display and SEB SA 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 SEB SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Display and SEB SA.
Diversification Opportunities for LG Display and SEB SA
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between LGA and SEB is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding LG Display Co and SEB SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEB 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 SEB SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEB SA has no effect on the direction of LG Display i.e., LG Display and SEB SA go up and down completely randomly.
Pair Corralation between LG Display and SEB SA
Assuming the 90 days horizon LG Display Co is expected to under-perform the SEB SA. In addition to that, LG Display is 1.58 times more volatile than SEB SA. It trades about -0.05 of its total potential returns per unit of risk. SEB SA is currently generating about 0.0 per unit of volatility. If you would invest 10,002 in SEB SA on September 14, 2024 and sell it today you would lose (532.00) from holding SEB SA or give up 5.32% 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. SEB SA
Performance |
| Timeline |
| LG Display |
| SEB SA |
LG Display and SEB SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Display and SEB SA
The main advantage of trading using opposite LG Display and SEB SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Display position performs unexpectedly, SEB SA 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 SEB SA will offset losses from the drop in SEB SA's long position.| LG Display vs. Samsung Electronics Co | LG Display vs. Sony Group | LG Display vs. Superior Plus Corp | LG Display vs. SIVERS SEMICONDUCTORS AB |
| SEB SA vs. Ryanair Holdings plc | SEB SA vs. Flutter Entertainment PLC | SEB SA vs. LG Display Co | SEB SA vs. FORWARD AIR P |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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