Correlation Between LG Display and S A P
Can any of the company-specific risk be diversified away by investing in both LG Display and S A P 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 S A P 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 SAP SE, you can compare the effects of market volatilities on LG Display and S A P 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 S A P. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Display and S A P.
Diversification Opportunities for LG Display and S A P
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between LGA and SAP is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding LG Display Co and SAP SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAP SE 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 S A P. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAP SE has no effect on the direction of LG Display i.e., LG Display and S A P go up and down completely randomly.
Pair Corralation between LG Display and S A P
Assuming the 90 days horizon LG Display Co is expected to under-perform the S A P. In addition to that, LG Display is 1.57 times more volatile than SAP SE. It trades about -0.08 of its total potential returns per unit of risk. SAP SE is currently generating about 0.16 per unit of volatility. If you would invest 19,752 in SAP SE on August 29, 2024 and sell it today you would earn a total of 2,628 from holding SAP SE or generate 13.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.46% |
| Values | Daily Returns |
LG Display Co vs. SAP SE
Performance |
| Timeline |
| LG Display |
| SAP SE |
LG Display and S A P Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Display and S A P
The main advantage of trading using opposite LG Display and S A P positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Display position performs unexpectedly, S A P 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 S A P will offset losses from the drop in S A P's long position.| LG Display vs. JAPAN TOBACCO UNSPADR12 | LG Display vs. Grupo Carso SAB | LG Display vs. XLMedia PLC | LG Display vs. Dave Busters Entertainment |
| S A P vs. REINET INVESTMENTS SCA | S A P vs. Boiron SA | S A P vs. BlueScope Steel Limited | S A P vs. AOYAMA TRADING |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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