Correlation Between Carriesoft and LG Display

Can any of the company-specific risk be diversified away by investing in both Carriesoft 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 Carriesoft and LG Display into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Carriesoft Co and LG Display Co, you can compare the effects of market volatilities on Carriesoft 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 Carriesoft with a short position of LG Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carriesoft and LG Display.

Diversification Opportunities for Carriesoft and LG Display

-0.35

Correlation Coefficient

Carriesoft  LG Display

Very good diversification

The 3 months correlation between Carriesoft and 034220 is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Carriesoft Co and LG Display Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Display and Carriesoft 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 Carriesoft Co 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 Carriesoft i.e., Carriesoft and LG Display go up and down completely randomly.

Pair Corralation between Carriesoft and LG Display

Assuming the 90 days trading horizon Carriesoft Co is expected to under-perform the LG Display. In addition to that, Carriesoft is 1.75 times more volatile than LG Display Co. It trades about -0.01 of its total potential returns per unit of risk. LG Display Co is currently generating about -0.01 per unit of volatility. If you would invest  1,216,242  in LG Display Co on September 25, 2024 and sell it today you would lose (256,242) from holding LG Display Co or give up 21.07% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Carriesoft Co  vs.  LG Display Co

Carriesoft

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Carriesoft Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Carriesoft sustained solid returns over the last few months and may actually be approaching a breakup point.

LG Display

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LG Display Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Carriesoft and LG Display

The main advantage of trading using opposite Carriesoft and LG Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carriesoft 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 Carriesoft Co 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.

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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.