Correlation Between LG Display and GemVaxKAEL CoLtd
Can any of the company-specific risk be diversified away by investing in both LG Display and GemVaxKAEL CoLtd 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 GemVaxKAEL CoLtd into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Display and GemVaxKAEL CoLtd, you can compare the effects of market volatilities on LG Display and GemVaxKAEL CoLtd 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 GemVaxKAEL CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Display and GemVaxKAEL CoLtd.
Diversification Opportunities for LG Display and GemVaxKAEL CoLtd
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 034220 and GemVaxKAEL is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding LG Display and GemVaxKAEL CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GemVaxKAEL CoLtd 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 are associated (or correlated) with GemVaxKAEL CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GemVaxKAEL CoLtd has no effect on the direction of LG Display i.e., LG Display and GemVaxKAEL CoLtd go up and down completely randomly.
Pair Corralation between LG Display and GemVaxKAEL CoLtd
Assuming the 90 days trading horizon LG Display is expected to generate 0.29 times more return on investment than GemVaxKAEL CoLtd. However, LG Display is 3.49 times less risky than GemVaxKAEL CoLtd. It trades about -0.11 of its potential returns per unit of risk. GemVaxKAEL CoLtd is currently generating about -0.04 per unit of risk. If you would invest 1,063,000 in LG Display on October 7, 2024 and sell it today you would lose (144,000) from holding LG Display or give up 13.55% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
LG Display vs. GemVaxKAEL CoLtd
Performance |
Timeline |
LG Display |
GemVaxKAEL CoLtd |
LG Display and GemVaxKAEL CoLtd Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with LG Display and GemVaxKAEL CoLtd
The main advantage of trading using opposite LG Display and GemVaxKAEL CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Display position performs unexpectedly, GemVaxKAEL CoLtd 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 GemVaxKAEL CoLtd will offset losses from the drop in GemVaxKAEL CoLtd's long position.LG Display vs. KTB Investment Securities | LG Display vs. Korea Information Communications | LG Display vs. Daol Investment Securities | LG Display vs. Atinum Investment Co |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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