Correlation Between ZINC MEDIA and LG Display
Can any of the company-specific risk be diversified away by investing in both ZINC MEDIA 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 ZINC MEDIA and LG Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ZINC MEDIA GR and LG Display Co, you can compare the effects of market volatilities on ZINC MEDIA 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 ZINC MEDIA with a short position of LG Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZINC MEDIA and LG Display.
Diversification Opportunities for ZINC MEDIA and LG Display
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ZINC and LGA is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding ZINC MEDIA GR and LG Display Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Display and ZINC MEDIA 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 ZINC MEDIA GR 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 ZINC MEDIA i.e., ZINC MEDIA and LG Display go up and down completely randomly.
Pair Corralation between ZINC MEDIA and LG Display
Assuming the 90 days trading horizon ZINC MEDIA GR is expected to under-perform the LG Display. In addition to that, ZINC MEDIA is 1.0 times more volatile than LG Display Co. It trades about -0.03 of its total potential returns per unit of risk. LG Display Co is currently generating about -0.02 per unit of volatility. If you would invest 458.00 in LG Display Co on September 20, 2024 and sell it today you would lose (160.00) from holding LG Display Co or give up 34.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ZINC MEDIA GR vs. LG Display Co
Performance |
| Timeline |
| ZINC MEDIA GR |
| LG Display |
ZINC MEDIA and LG Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ZINC MEDIA and LG Display
The main advantage of trading using opposite ZINC MEDIA and LG Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ZINC MEDIA 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.The idea behind ZINC MEDIA GR and LG Display Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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