Correlation Between LG Display and Magic Software
Can any of the company-specific risk be diversified away by investing in both LG Display and Magic Software 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 Magic Software 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 Magic Software Enterprises, you can compare the effects of market volatilities on LG Display and Magic Software 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 Magic Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Display and Magic Software.
Diversification Opportunities for LG Display and Magic Software
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between LGA and Magic is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding LG Display Co and Magic Software Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magic Software Enter 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 Magic Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magic Software Enter has no effect on the direction of LG Display i.e., LG Display and Magic Software go up and down completely randomly.
Pair Corralation between LG Display and Magic Software
Assuming the 90 days horizon LG Display Co is expected to under-perform the Magic Software. In addition to that, LG Display is 1.01 times more volatile than Magic Software Enterprises. It trades about -0.01 of its total potential returns per unit of risk. Magic Software Enterprises is currently generating about 0.31 per unit of volatility. If you would invest 1,090 in Magic Software Enterprises on October 30, 2024 and sell it today you would earn a total of 110.00 from holding Magic Software Enterprises or generate 10.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Display Co vs. Magic Software Enterprises
Performance |
| Timeline |
| LG Display |
| Magic Software Enter |
LG Display and Magic Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Display and Magic Software
The main advantage of trading using opposite LG Display and Magic Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Display position performs unexpectedly, Magic Software 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 Magic Software will offset losses from the drop in Magic Software's long position.| LG Display vs. HANOVER INSURANCE | LG Display vs. MAVEN WIRELESS SWEDEN | LG Display vs. Insurance Australia Group | LG Display vs. Reinsurance Group of |
| Magic Software vs. TRADELINK ELECTRON | Magic Software vs. FIRST SHIP LEASE | Magic Software vs. Sixt Leasing SE | Magic Software vs. TRADEDOUBLER AB SK |
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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