Correlation Between LG Display and Casio Computer

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

Diversification Opportunities for LG Display and Casio Computer

-0.04

Correlation Coefficient

LG Display  Casio Computer

Good diversification

The 3 months correlation between LPL and Casio is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding LG Display Co and Casio Computer Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Casio Computer 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 Casio Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Casio Computer has no effect on the direction of LG Display i.e., LG Display and Casio Computer go up and down completely randomly.

Pair Corralation between LG Display and Casio Computer

Considering the 90-day investment horizon LG Display is expected to generate 2.36 times less return on investment than Casio Computer. But when comparing it to its historical volatility, LG Display Co is 1.33 times less risky than Casio Computer. It trades about 0.03 of its potential returns per unit of risk. Casio Computer Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  8,250  in Casio Computer Co on December 27, 2024 and sell it today you would earn a total of  425.00  from holding Casio Computer Co or generate 5.15% return on investment over 90 days.

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

LG Display Co  vs.  Casio Computer Co

LG Display

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in LG Display Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, LG Display is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Casio Computer

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Casio Computer Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, Casio Computer may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with LG Display and Casio Computer

The main advantage of trading using opposite LG Display and Casio Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Display position performs unexpectedly, Casio Computer 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 Casio Computer will offset losses from the drop in Casio Computer's long position.

The idea behind LG Display Co and Casio Computer 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.