Correlation Between LG Display and X FAB
Can any of the company-specific risk be diversified away by investing in both LG Display and X FAB 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 X FAB 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 X FAB Silicon Foundries, you can compare the effects of market volatilities on LG Display and X FAB 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 X FAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Display and X FAB.
Diversification Opportunities for LG Display and X FAB
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between LGA and XFB is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding LG Display Co and X FAB Silicon Foundries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X FAB Silicon 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 X FAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X FAB Silicon has no effect on the direction of LG Display i.e., LG Display and X FAB go up and down completely randomly.
Pair Corralation between LG Display and X FAB
Assuming the 90 days horizon LG Display Co is expected to generate 0.61 times more return on investment than X FAB. However, LG Display Co is 1.64 times less risky than X FAB. It trades about 0.01 of its potential returns per unit of risk. X FAB Silicon Foundries is currently generating about -0.07 per unit of risk. If you would invest 308.00 in LG Display Co on November 6, 2024 and sell it today you would earn a total of 0.00 from holding LG Display Co or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Display Co vs. X FAB Silicon Foundries
Performance |
| Timeline |
| LG Display |
| X FAB Silicon |
LG Display and X FAB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Display and X FAB
The main advantage of trading using opposite LG Display and X FAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Display position performs unexpectedly, X FAB 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 X FAB will offset losses from the drop in X FAB's long position.| LG Display vs. CHEMICAL INDUSTRIES | LG Display vs. Guidewire Software | LG Display vs. TIANDE CHEMICAL | LG Display vs. Mitsui Chemicals |
| X FAB vs. MOLSON RS BEVERAGE | X FAB vs. CAL MAINE FOODS | X FAB vs. GBS Software AG | X FAB vs. Magic Software Enterprises |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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