Correlation Between Singing Machine and LG Display

Can any of the company-specific risk be diversified away by investing in both Singing Machine and LG Display 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 Singing Machine and LG Display into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between The Singing Machine and LG Display Co, you can compare the effects of market volatilities on Singing Machine and LG Display 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 Singing Machine with a short position of LG Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Singing Machine and LG Display.

Diversification Opportunities for Singing Machine and LG Display

0.66

Correlation Coefficient

Singing Machine  LG Display

Poor diversification

The 3 months correlation between Singing and LPL is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding The Singing Machine and LG Display Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Display and Singing Machine 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 The Singing Machine are associated (or correlated) with LG Display. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Display has no effect on the direction of Singing Machine i.e., Singing Machine and LG Display go up and down completely randomly.

Pair Corralation between Singing Machine and LG Display

Given the investment horizon of 90 days The Singing Machine is expected to under-perform the LG Display. In addition to that, Singing Machine is 4.32 times more volatile than LG Display Co. It trades about -0.18 of its total potential returns per unit of risk. LG Display Co is currently generating about -0.11 per unit of volatility. If you would invest  414.00  in LG Display Co on August 30, 2024 and sell it today you would lose (67.00) from holding LG Display Co or give up 16.18% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	80.95%
Values	Daily Returns

The Singing Machine  vs.  LG Display Co

Singing Machine

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Singing Machine has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

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 December 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Singing Machine and LG Display

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

The idea behind The Singing Machine and LG Display 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.