Correlation Between INSURANCE AUST and LG Display
Can any of the company-specific risk be diversified away by investing in both INSURANCE AUST and LG Display 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 INSURANCE AUST and LG Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INSURANCE AUST GRP and LG Display Co, you can compare the effects of market volatilities on INSURANCE AUST and LG Display 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 INSURANCE AUST with a short position of LG Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of INSURANCE AUST and LG Display.
Diversification Opportunities for INSURANCE AUST and LG Display
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between INSURANCE and LGA is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding INSURANCE AUST GRP and LG Display Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Display and INSURANCE AUST 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 INSURANCE AUST GRP are associated (or correlated) with LG Display. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Display has no effect on the direction of INSURANCE AUST i.e., INSURANCE AUST and LG Display go up and down completely randomly.
Pair Corralation between INSURANCE AUST and LG Display
Assuming the 90 days trading horizon INSURANCE AUST GRP is expected to generate 1.22 times more return on investment than LG Display. However, INSURANCE AUST is 1.22 times more volatile than LG Display Co. It trades about 0.03 of its potential returns per unit of risk. LG Display Co is currently generating about -0.28 per unit of risk. If you would invest 500.00 in INSURANCE AUST GRP on September 20, 2024 and sell it today you would earn a total of 5.00 from holding INSURANCE AUST GRP or generate 1.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
INSURANCE AUST GRP vs. LG Display Co
Performance |
| Timeline |
| INSURANCE AUST GRP |
| LG Display |
INSURANCE AUST and LG Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INSURANCE AUST and LG Display
The main advantage of trading using opposite INSURANCE AUST and LG Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INSURANCE AUST position performs unexpectedly, LG Display 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 LG Display will offset losses from the drop in LG Display's long position.| INSURANCE AUST vs. Apple Inc | INSURANCE AUST vs. Apple Inc | INSURANCE AUST vs. Apple Inc | INSURANCE AUST vs. Microsoft |
| LG Display vs. Reinsurance Group of | LG Display vs. Singapore Reinsurance | LG Display vs. INSURANCE AUST GRP | LG Display vs. Ping An Insurance |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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