Correlation Between LG Display and Sinopec Oilfield
Can any of the company-specific risk be diversified away by investing in both LG Display and Sinopec Oilfield 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 Sinopec Oilfield 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 Sinopec Oilfield Service, you can compare the effects of market volatilities on LG Display and Sinopec Oilfield 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 Sinopec Oilfield. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Display and Sinopec Oilfield.
Diversification Opportunities for LG Display and Sinopec Oilfield
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between LGA and Sinopec is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding LG Display Co and Sinopec Oilfield Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinopec Oilfield Service 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 Sinopec Oilfield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinopec Oilfield Service has no effect on the direction of LG Display i.e., LG Display and Sinopec Oilfield go up and down completely randomly.
Pair Corralation between LG Display and Sinopec Oilfield
Assuming the 90 days horizon LG Display Co is expected to under-perform the Sinopec Oilfield. But the stock apears to be less risky and, when comparing its historical volatility, LG Display Co is 3.07 times less risky than Sinopec Oilfield. The stock trades about -0.05 of its potential returns per unit of risk. The Sinopec Oilfield Service is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 5.80 in Sinopec Oilfield Service on September 14, 2024 and sell it today you would earn a total of 1.65 from holding Sinopec Oilfield Service or generate 28.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Display Co vs. Sinopec Oilfield Service
Performance |
| Timeline |
| LG Display |
| Sinopec Oilfield Service |
LG Display and Sinopec Oilfield Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Display and Sinopec Oilfield
The main advantage of trading using opposite LG Display and Sinopec Oilfield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Display position performs unexpectedly, Sinopec Oilfield 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 Sinopec Oilfield will offset losses from the drop in Sinopec Oilfield's long position.| LG Display vs. Samsung Electronics Co | LG Display vs. Sony Group | LG Display vs. Superior Plus Corp | LG Display vs. SIVERS SEMICONDUCTORS AB |
| Sinopec Oilfield vs. COLUMBIA SPORTSWEAR | Sinopec Oilfield vs. Lendlease Group | Sinopec Oilfield vs. WILLIS LEASE FIN | Sinopec Oilfield vs. LG Display Co |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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