Correlation Between LG Display and Information Services
Can any of the company-specific risk be diversified away by investing in both LG Display and Information Services 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 Information Services 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 Information Services International Dentsu, you can compare the effects of market volatilities on LG Display and Information Services 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 Information Services. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Display and Information Services.
Diversification Opportunities for LG Display and Information Services
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between LGA and Information is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding LG Display Co and Information Services Internati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Information Services 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 Information Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Information Services has no effect on the direction of LG Display i.e., LG Display and Information Services go up and down completely randomly.
Pair Corralation between LG Display and Information Services
Assuming the 90 days horizon LG Display Co is expected to under-perform the Information Services. In addition to that, LG Display is 1.18 times more volatile than Information Services International Dentsu. It trades about -0.05 of its total potential returns per unit of risk. Information Services International Dentsu is currently generating about 0.01 per unit of volatility. If you would invest 3,420 in Information Services International Dentsu on September 4, 2024 and sell it today you would lose (20.00) from holding Information Services International Dentsu or give up 0.58% 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. Information Services Internati
Performance |
| Timeline |
| LG Display |
| Information Services |
LG Display and Information Services Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Display and Information Services
The main advantage of trading using opposite LG Display and Information Services positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Display position performs unexpectedly, Information Services 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 Information Services will offset losses from the drop in Information Services' long position.| LG Display vs. Apple Inc | LG Display vs. Samsung Electronics Co | LG Display vs. Xiaomi | LG Display vs. Panasonic Corp |
| Information Services vs. FUJITSU LTD ADR | Information Services vs. Superior Plus Corp | Information Services vs. NMI Holdings | Information Services vs. Origin Agritech |
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.
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine |