Correlation Between Nissan Chemical and LG Display
Can any of the company-specific risk be diversified away by investing in both Nissan Chemical 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 Nissan Chemical and LG Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nissan Chemical Corp and LG Display Co, you can compare the effects of market volatilities on Nissan Chemical 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 Nissan Chemical with a short position of LG Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nissan Chemical and LG Display.
Diversification Opportunities for Nissan Chemical and LG Display
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Nissan and LGA is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Nissan Chemical Corp and LG Display Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Display and Nissan Chemical 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 Nissan Chemical Corp 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 Nissan Chemical i.e., Nissan Chemical and LG Display go up and down completely randomly.
Pair Corralation between Nissan Chemical and LG Display
Assuming the 90 days trading horizon Nissan Chemical Corp is expected to under-perform the LG Display. But the stock apears to be less risky and, when comparing its historical volatility, Nissan Chemical Corp is 1.06 times less risky than LG Display. The stock trades about -0.37 of its potential returns per unit of risk. The LG Display Co is currently generating about -0.26 of returns per unit of risk over similar time horizon. If you would invest 328.00 in LG Display Co on September 24, 2024 and sell it today you would lose (26.00) from holding LG Display Co or give up 7.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nissan Chemical Corp vs. LG Display Co
Performance |
| Timeline |
| Nissan Chemical Corp |
| LG Display |
Nissan Chemical and LG Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nissan Chemical and LG Display
The main advantage of trading using opposite Nissan Chemical and LG Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nissan Chemical 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.| Nissan Chemical vs. Apple Inc | Nissan Chemical vs. Apple Inc | Nissan Chemical vs. Apple Inc | Nissan Chemical vs. Apple Inc |
| LG Display vs. Magic Software Enterprises | LG Display vs. CyberArk Software | LG Display vs. ATOSS SOFTWARE | LG Display vs. Cass Information Systems |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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