Correlation Between JAPAN AIRLINES and LG Display
Can any of the company-specific risk be diversified away by investing in both JAPAN AIRLINES 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 JAPAN AIRLINES and LG Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JAPAN AIRLINES and LG Display Co, you can compare the effects of market volatilities on JAPAN AIRLINES 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 JAPAN AIRLINES with a short position of LG Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of JAPAN AIRLINES and LG Display.
Diversification Opportunities for JAPAN AIRLINES and LG Display
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between JAPAN and LGA is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding JAPAN AIRLINES and LG Display Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Display and JAPAN AIRLINES 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 JAPAN AIRLINES 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 JAPAN AIRLINES i.e., JAPAN AIRLINES and LG Display go up and down completely randomly.
Pair Corralation between JAPAN AIRLINES and LG Display
Assuming the 90 days trading horizon JAPAN AIRLINES is expected to generate 0.48 times more return on investment than LG Display. However, JAPAN AIRLINES is 2.07 times less risky than LG Display. It trades about 0.14 of its potential returns per unit of risk. LG Display Co is currently generating about 0.0 per unit of risk. If you would invest 1,500 in JAPAN AIRLINES on December 28, 2024 and sell it today you would earn a total of 160.00 from holding JAPAN AIRLINES or generate 10.67% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
JAPAN AIRLINES vs. LG Display Co
Performance |
Timeline |
JAPAN AIRLINES |
LG Display |
JAPAN AIRLINES and LG Display Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with JAPAN AIRLINES and LG Display
The main advantage of trading using opposite JAPAN AIRLINES and LG Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JAPAN AIRLINES 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.JAPAN AIRLINES vs. Ping An Insurance | JAPAN AIRLINES vs. COSTCO WHOLESALE CDR | JAPAN AIRLINES vs. PANIN INSURANCE | JAPAN AIRLINES vs. UNIQA INSURANCE GR |
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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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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