Correlation Between LG Display and Playtech Plc
Can any of the company-specific risk be diversified away by investing in both LG Display and Playtech Plc 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 Playtech Plc 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 Playtech plc, you can compare the effects of market volatilities on LG Display and Playtech Plc 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 Playtech Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Display and Playtech Plc.
Diversification Opportunities for LG Display and Playtech Plc
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between LGA and Playtech is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding LG Display Co and Playtech plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playtech plc 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 Playtech Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Playtech plc has no effect on the direction of LG Display i.e., LG Display and Playtech Plc go up and down completely randomly.
Pair Corralation between LG Display and Playtech Plc
Assuming the 90 days horizon LG Display Co is expected to under-perform the Playtech Plc. In addition to that, LG Display is 1.37 times more volatile than Playtech plc. It trades about -0.08 of its total potential returns per unit of risk. Playtech plc is currently generating about 0.16 per unit of volatility. If you would invest 754.00 in Playtech plc on August 31, 2024 and sell it today you would earn a total of 114.00 from holding Playtech plc or generate 15.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Display Co vs. Playtech plc
Performance |
| Timeline |
| LG Display |
| Playtech plc |
LG Display and Playtech Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Display and Playtech Plc
The main advantage of trading using opposite LG Display and Playtech Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Display position performs unexpectedly, Playtech Plc 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 Playtech Plc will offset losses from the drop in Playtech Plc's long position.| LG Display vs. SK TELECOM TDADR | LG Display vs. Rogers Communications | LG Display vs. Entravision Communications | LG Display vs. Singapore Telecommunications Limited |
| Playtech Plc vs. MAVEN WIRELESS SWEDEN | Playtech Plc vs. Tri Pointe Homes | Playtech Plc vs. Gol Intelligent Airlines | Playtech Plc vs. American Airlines Group |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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