Correlation Between LG Display and Wearable Devices
Can any of the company-specific risk be diversified away by investing in both LG Display and Wearable Devices 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 Wearable Devices 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 Wearable Devices, you can compare the effects of market volatilities on LG Display and Wearable Devices 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 Wearable Devices. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Display and Wearable Devices.
Diversification Opportunities for LG Display and Wearable Devices
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between LPL and Wearable is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding LG Display Co and Wearable Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wearable Devices 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 Wearable Devices. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wearable Devices has no effect on the direction of LG Display i.e., LG Display and Wearable Devices go up and down completely randomly.
Pair Corralation between LG Display and Wearable Devices
Considering the 90-day investment horizon LG Display is expected to generate 80.76 times less return on investment than Wearable Devices. But when comparing it to its historical volatility, LG Display Co is 28.13 times less risky than Wearable Devices. It trades about 0.1 of its potential returns per unit of risk. Wearable Devices is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 23.00 in Wearable Devices on November 18, 2024 and sell it today you would earn a total of 77.00 from holding Wearable Devices or generate 334.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 80.95% |
| Values | Daily Returns |
LG Display Co vs. Wearable Devices
Performance |
| Timeline |
| LG Display |
| Wearable Devices |
LG Display and Wearable Devices Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Display and Wearable Devices
The main advantage of trading using opposite LG Display and Wearable Devices positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Display position performs unexpectedly, Wearable Devices 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 Wearable Devices will offset losses from the drop in Wearable Devices' long position.| LG Display vs. VOXX International | LG Display vs. Emerson Radio | LG Display vs. Universal Electronics | LG Display vs. Sonos Inc |
| Wearable Devices vs. Wearable Devices | Wearable Devices vs. Yoshiharu Global Co | Wearable Devices vs. bioAffinity Technologies, |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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