Correlation Between LG Display and Nissan Chemical
Can any of the company-specific risk be diversified away by investing in both LG Display and Nissan Chemical 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 Nissan Chemical 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 Nissan Chemical Corp, you can compare the effects of market volatilities on LG Display and Nissan Chemical 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 Nissan Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Display and Nissan Chemical.
Diversification Opportunities for LG Display and Nissan Chemical
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between LGA and Nissan is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding LG Display Co and Nissan Chemical Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nissan Chemical Corp 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 Nissan Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nissan Chemical Corp has no effect on the direction of LG Display i.e., LG Display and Nissan Chemical go up and down completely randomly.
Pair Corralation between LG Display and Nissan Chemical
Assuming the 90 days horizon LG Display Co is expected to generate 1.06 times more return on investment than Nissan Chemical. However, LG Display is 1.06 times more volatile than Nissan Chemical Corp. It trades about -0.26 of its potential returns per unit of risk. Nissan Chemical Corp is currently generating about -0.37 per unit of risk. If you would invest 328.00 in LG Display Co on September 24, 2024 and sell it today you would lose (26.00) from holding LG Display Co or give up 7.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Display Co vs. Nissan Chemical Corp
Performance |
| Timeline |
| LG Display |
| Nissan Chemical Corp |
LG Display and Nissan Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Display and Nissan Chemical
The main advantage of trading using opposite LG Display and Nissan Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Display position performs unexpectedly, Nissan Chemical 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 Nissan Chemical will offset losses from the drop in Nissan Chemical's long position.| LG Display vs. Magic Software Enterprises | LG Display vs. CyberArk Software | LG Display vs. ATOSS SOFTWARE | LG Display vs. Cass Information Systems |
| Nissan Chemical vs. Apple Inc | Nissan Chemical vs. Apple Inc | Nissan Chemical vs. Apple Inc | Nissan Chemical vs. Apple Inc |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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