Correlation Between LG Display and POLARX
Can any of the company-specific risk be diversified away by investing in both LG Display and POLARX 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 POLARX 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 POLARX LTD, you can compare the effects of market volatilities on LG Display and POLARX 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 POLARX. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Display and POLARX.
Diversification Opportunities for LG Display and POLARX
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between LGA and POLARX is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding LG Display Co and POLARX LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POLARX LTD 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 POLARX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of POLARX LTD has no effect on the direction of LG Display i.e., LG Display and POLARX go up and down completely randomly.
Pair Corralation between LG Display and POLARX
Assuming the 90 days horizon LG Display Co is expected to under-perform the POLARX. But the stock apears to be less risky and, when comparing its historical volatility, LG Display Co is 14.15 times less risky than POLARX. The stock trades about -0.03 of its potential returns per unit of risk. The POLARX LTD is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1.25 in POLARX LTD on October 13, 2024 and sell it today you would lose (1.20) from holding POLARX LTD or give up 96.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Display Co vs. POLARX LTD
Performance |
| Timeline |
| LG Display |
| POLARX LTD |
LG Display and POLARX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Display and POLARX
The main advantage of trading using opposite LG Display and POLARX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Display position performs unexpectedly, POLARX 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 POLARX will offset losses from the drop in POLARX's long position.| LG Display vs. United Utilities Group | LG Display vs. MYFAIR GOLD P | LG Display vs. FAIR ISAAC | LG Display vs. Ryanair Holdings plc |
| POLARX vs. GRUPO CARSO A1 | POLARX vs. Daito Trust Construction | POLARX vs. Tokyu Construction Co | POLARX vs. Cars 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
Other Complementary Tools
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets |