Correlation Between LG Display and Next Entertainment
Can any of the company-specific risk be diversified away by investing in both LG Display and Next Entertainment 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 Next Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Display Co and Next Entertainment World, you can compare the effects of market volatilities on LG Display and Next Entertainment 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 Next Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Display and Next Entertainment.
Diversification Opportunities for LG Display and Next Entertainment
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 034220 and Next is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding LG Display Co and Next Entertainment World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Next Entertainment World 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 Co are associated (or correlated) with Next Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Next Entertainment World has no effect on the direction of LG Display i.e., LG Display and Next Entertainment go up and down completely randomly.
Pair Corralation between LG Display and Next Entertainment
Assuming the 90 days trading horizon LG Display Co is expected to generate 0.76 times more return on investment than Next Entertainment. However, LG Display Co is 1.32 times less risky than Next Entertainment. It trades about -0.01 of its potential returns per unit of risk. Next Entertainment World is currently generating about -0.07 per unit of risk. If you would invest 1,169,464 in LG Display Co on September 23, 2024 and sell it today you would lose (263,464) from holding LG Display Co or give up 22.53% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
LG Display Co vs. Next Entertainment World
Performance |
Timeline |
LG Display |
Next Entertainment World |
LG Display and Next Entertainment Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with LG Display and Next Entertainment
The main advantage of trading using opposite LG Display and Next Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Display position performs unexpectedly, Next Entertainment 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 Next Entertainment will offset losses from the drop in Next Entertainment's long position.LG Display vs. AptaBio Therapeutics | LG Display vs. Wonbang Tech Co | LG Display vs. Busan Industrial Co | LG Display vs. Busan Ind |
Next Entertainment vs. LG Display Co | Next Entertainment vs. RF Materials Co | Next Entertainment vs. EV Advanced Material | Next Entertainment vs. Neungyule Education |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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