Correlation Between LG Display and Northern Star
Can any of the company-specific risk be diversified away by investing in both LG Display and Northern Star 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 Northern Star 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 Northern Star Resources, you can compare the effects of market volatilities on LG Display and Northern Star 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 Northern Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Display and Northern Star.
Diversification Opportunities for LG Display and Northern Star
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between LGA and Northern is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding LG Display Co and Northern Star Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Star Resources 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 Northern Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Star Resources has no effect on the direction of LG Display i.e., LG Display and Northern Star go up and down completely randomly.
Pair Corralation between LG Display and Northern Star
Assuming the 90 days horizon LG Display Co is expected to under-perform the Northern Star. In addition to that, LG Display is 1.06 times more volatile than Northern Star Resources. It trades about -0.05 of its total potential returns per unit of risk. Northern Star Resources is currently generating about 0.07 per unit of volatility. If you would invest 825.00 in Northern Star Resources on September 19, 2024 and sell it today you would earn a total of 141.00 from holding Northern Star Resources or generate 17.09% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 99.22% |
Values | Daily Returns |
LG Display Co vs. Northern Star Resources
Performance |
Timeline |
LG Display |
Northern Star Resources |
LG Display and Northern Star Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with LG Display and Northern Star
The main advantage of trading using opposite LG Display and Northern Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Display position performs unexpectedly, Northern Star 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 Northern Star will offset losses from the drop in Northern Star's long position.LG Display vs. Samsung Electronics Co | LG Display vs. Superior Plus Corp | LG Display vs. SIVERS SEMICONDUCTORS AB | LG Display vs. Norsk Hydro ASA |
Northern Star vs. LG Display Co | Northern Star vs. PLAYMATES TOYS | Northern Star vs. COLUMBIA SPORTSWEAR | Northern Star vs. Canadian Utilities Limited |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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