Correlation Between LG Display and Realord Group
Can any of the company-specific risk be diversified away by investing in both LG Display and Realord Group 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 Realord Group 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 Realord Group Holdings, you can compare the effects of market volatilities on LG Display and Realord Group 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 Realord Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Display and Realord Group.
Diversification Opportunities for LG Display and Realord Group
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between LGA and Realord is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding LG Display Co and Realord Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Realord Group Holdings 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 Realord Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Realord Group Holdings has no effect on the direction of LG Display i.e., LG Display and Realord Group go up and down completely randomly.
Pair Corralation between LG Display and Realord Group
Assuming the 90 days horizon LG Display Co is expected to under-perform the Realord Group. But the stock apears to be less risky and, when comparing its historical volatility, LG Display Co is 1.57 times less risky than Realord Group. The stock trades about -0.29 of its potential returns per unit of risk. The Realord Group Holdings is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 88.00 in Realord Group Holdings on September 26, 2024 and sell it today you would lose (2.00) from holding Realord Group Holdings or give up 2.27% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
LG Display Co vs. Realord Group Holdings
Performance |
Timeline |
LG Display |
Realord Group Holdings |
LG Display and Realord Group Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with LG Display and Realord Group
The main advantage of trading using opposite LG Display and Realord Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Display position performs unexpectedly, Realord Group 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 Realord Group will offset losses from the drop in Realord Group's long position.LG Display vs. Apple Inc | LG Display vs. Samsung Electronics Co | LG Display vs. Samsung Electronics Co | LG Display vs. Sony Group |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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