Correlation Between LG Display and Orient Overseas
Can any of the company-specific risk be diversified away by investing in both LG Display and Orient Overseas 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 Orient Overseas 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 Orient Overseas Limited, you can compare the effects of market volatilities on LG Display and Orient Overseas 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 Orient Overseas. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Display and Orient Overseas.
Diversification Opportunities for LG Display and Orient Overseas
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between LGA and Orient is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding LG Display Co and Orient Overseas Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orient Overseas 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 Orient Overseas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orient Overseas has no effect on the direction of LG Display i.e., LG Display and Orient Overseas go up and down completely randomly.
Pair Corralation between LG Display and Orient Overseas
Assuming the 90 days horizon LG Display Co is expected to under-perform the Orient Overseas. But the stock apears to be less risky and, when comparing its historical volatility, LG Display Co is 1.3 times less risky than Orient Overseas. The stock trades about -0.27 of its potential returns per unit of risk. The Orient Overseas Limited is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 1,294 in Orient Overseas Limited on September 12, 2024 and sell it today you would lose (69.00) from holding Orient Overseas Limited or give up 5.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
LG Display Co vs. Orient Overseas Limited
Performance |
| Timeline |
| LG Display |
| Orient Overseas |
LG Display and Orient Overseas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Display and Orient Overseas
The main advantage of trading using opposite LG Display and Orient Overseas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Display position performs unexpectedly, Orient Overseas 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 Orient Overseas will offset losses from the drop in Orient Overseas' long position.| LG Display vs. Samsung Electronics Co | LG Display vs. Samsung Electronics Co | LG Display vs. Sony Group | LG Display vs. Superior Plus Corp |
| Orient Overseas vs. Superior Plus Corp | Orient Overseas vs. SIVERS SEMICONDUCTORS AB | Orient Overseas vs. Norsk Hydro ASA | Orient Overseas vs. Reliance Steel Aluminum |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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