Correlation Between LG Display and Microsoft

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Can any of the company-specific risk be diversified away by investing in both LG Display and Microsoft 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 Microsoft 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 Microsoft, you can compare the effects of market volatilities on LG Display and Microsoft 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 Microsoft. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Display and Microsoft.

Diversification Opportunities for LG Display and Microsoft

LGAMicrosoftDiversified AwayLGAMicrosoftDiversified Away100%
-0.68
  Correlation Coefficient

Excellent diversification

The 3 months correlation between LGA and Microsoft is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding LG Display Co and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft 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 Microsoft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microsoft has no effect on the direction of LG Display i.e., LG Display and Microsoft go up and down completely randomly.

Pair Corralation between LG Display and Microsoft

Assuming the 90 days horizon LG Display Co is expected to under-perform the Microsoft. In addition to that, LG Display is 1.11 times more volatile than Microsoft. It trades about -0.05 of its total potential returns per unit of risk. Microsoft is currently generating about 0.01 per unit of volatility. If you would invest  39,412  in Microsoft on November 8, 2024 and sell it today you would earn a total of  193.00  from holding Microsoft or generate 0.49% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

LG Display Co  vs.  Microsoft

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 -50510
JavaScript chart by amCharts 3.21.15LGA MSF
       Timeline  
LG Display 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 nearly stable basic indicators, LG Display is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb2.9533.053.13.153.23.253.33.35
Microsoft 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Microsoft is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb390400410420430

LG Display and Microsoft Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-2.86-2.14-1.43-0.710.00.661.342.022.713.39 0.060.080.100.120.140.16
JavaScript chart by amCharts 3.21.15LGA MSF
       Returns  

Pair Trading with LG Display and Microsoft

The main advantage of trading using opposite LG Display and Microsoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Display position performs unexpectedly, Microsoft 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 Microsoft will offset losses from the drop in Microsoft's long position.
The idea behind LG Display Co and Microsoft 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.

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