Correlation Between Sanyo Chemical and LG Display
Can any of the company-specific risk be diversified away by investing in both Sanyo 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 Sanyo 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 Sanyo Chemical Industries and LG Display Co, you can compare the effects of market volatilities on Sanyo 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 Sanyo Chemical with a short position of LG Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sanyo Chemical and LG Display.
Diversification Opportunities for Sanyo Chemical and LG Display
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sanyo and LGA is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Sanyo Chemical Industries and LG Display Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Display and Sanyo 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 Sanyo Chemical Industries 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 Sanyo Chemical i.e., Sanyo Chemical and LG Display go up and down completely randomly.
Pair Corralation between Sanyo Chemical and LG Display
Assuming the 90 days horizon Sanyo Chemical Industries is expected to generate 0.68 times more return on investment than LG Display. However, Sanyo Chemical Industries is 1.48 times less risky than LG Display. It trades about -0.09 of its potential returns per unit of risk. LG Display Co is currently generating about -0.15 per unit of risk. If you would invest 2,440 in Sanyo Chemical Industries on August 31, 2024 and sell it today you would lose (40.00) from holding Sanyo Chemical Industries or give up 1.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sanyo Chemical Industries vs. LG Display Co
Performance |
| Timeline |
| Sanyo Chemical Industries |
| LG Display |
Sanyo Chemical and LG Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sanyo Chemical and LG Display
The main advantage of trading using opposite Sanyo Chemical and LG Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sanyo 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.| Sanyo Chemical vs. Linde PLC | Sanyo Chemical vs. The Sherwin Williams | Sanyo Chemical vs. SIKA AG UNSPADR | Sanyo Chemical vs. LyondellBasell Industries NV |
| LG Display vs. SK TELECOM TDADR | LG Display vs. Rogers Communications | LG Display vs. Entravision Communications | LG Display vs. Singapore Telecommunications Limited |
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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