Correlation Between LG Display and Deswell Industries
Can any of the company-specific risk be diversified away by investing in both LG Display and Deswell Industries 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 Deswell Industries 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 Deswell Industries, you can compare the effects of market volatilities on LG Display and Deswell Industries 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 Deswell Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Display and Deswell Industries.
Diversification Opportunities for LG Display and Deswell Industries
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between LPL and Deswell is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding LG Display Co and Deswell Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deswell Industries 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 Deswell Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deswell Industries has no effect on the direction of LG Display i.e., LG Display and Deswell Industries go up and down completely randomly.
Pair Corralation between LG Display and Deswell Industries
Considering the 90-day investment horizon LG Display Co is expected to under-perform the Deswell Industries. In addition to that, LG Display is 1.07 times more volatile than Deswell Industries. It trades about -0.13 of its total potential returns per unit of risk. Deswell Industries is currently generating about -0.02 per unit of volatility. If you would invest 249.00 in Deswell Industries on October 31, 2024 and sell it today you would lose (10.00) from holding Deswell Industries or give up 4.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Display Co vs. Deswell Industries
Performance |
| Timeline |
| LG Display |
| Deswell Industries |
LG Display and Deswell Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Display and Deswell Industries
The main advantage of trading using opposite LG Display and Deswell Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Display position performs unexpectedly, Deswell Industries 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 Deswell Industries will offset losses from the drop in Deswell Industries' long position.| LG Display vs. VOXX International | LG Display vs. Emerson Radio | LG Display vs. Universal Electronics | LG Display vs. Sonos Inc |
| Deswell Industries vs. Ieh Corp | Deswell Industries vs. LGL Group | Deswell Industries vs. SigmaTron International | Deswell Industries vs. Daktronics |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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