Correlation Between LG Display and OmniAb

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

Diversification Opportunities for LG Display and OmniAb

-0.05

Correlation Coefficient

LG Display  OmniAb

Good diversification

The 3 months correlation between LPL and OmniAb is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding LG Display Co and OmniAb Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OmniAb Inc 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 OmniAb. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OmniAb Inc has no effect on the direction of LG Display i.e., LG Display and OmniAb go up and down completely randomly.

Pair Corralation between LG Display and OmniAb

Considering the 90-day investment horizon LG Display is expected to generate 1.67 times less return on investment than OmniAb. But when comparing it to its historical volatility, LG Display Co is 5.83 times less risky than OmniAb. It trades about 0.12 of its potential returns per unit of risk. OmniAb Inc is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  33.00  in OmniAb Inc on October 11, 2024 and sell it today you would lose (1.00) from holding OmniAb Inc or give up 3.03% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	47.62%
Values	Daily Returns

LG Display Co  vs.  OmniAb Inc

LG Display

Risk-Adjusted Performance

0 of 100

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 weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

OmniAb Inc

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days OmniAb Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly weak forward indicators, OmniAb showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LG Display and OmniAb

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

The idea behind LG Display Co and OmniAb Inc 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.