Correlation Between 14040HCY9 and LG Display

Can any of the company-specific risk be diversified away by investing in both 14040HCY9 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 14040HCY9 and LG Display into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between COF 5817 01 FEB 34 and LG Display Co, you can compare the effects of market volatilities on 14040HCY9 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 14040HCY9 with a short position of LG Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of 14040HCY9 and LG Display.

Diversification Opportunities for 14040HCY9 and LG Display

0.33

Correlation Coefficient

14040HCY9  LG Display

Weak diversification

The 3 months correlation between 14040HCY9 and LPL is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding COF 5817 01 FEB 34 and LG Display Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Display and 14040HCY9 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 COF 5817 01 FEB 34 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 14040HCY9 i.e., 14040HCY9 and LG Display go up and down completely randomly.

Pair Corralation between 14040HCY9 and LG Display

Assuming the 90 days trading horizon COF 5817 01 FEB 34 is expected to under-perform the LG Display. But the bond apears to be less risky and, when comparing its historical volatility, COF 5817 01 FEB 34 is 1.39 times less risky than LG Display. The bond trades about -0.09 of its potential returns per unit of risk. The LG Display Co is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  339.00  in LG Display Co on December 23, 2024 and sell it today you would lose (12.00) from holding LG Display Co or give up 3.54% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.83%
Values	Daily Returns

COF 5817 01 FEB 34  vs.  LG Display Co

COF 5817 01

Risk-Adjusted Performance

Very Weak

Over the last 90 days COF 5817 01 FEB 34 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for COF 5817 01 FEB 34 investors.

LG Display

Risk-Adjusted Performance

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 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.

Pair Trading with 14040HCY9 and LG Display

The main advantage of trading using opposite 14040HCY9 and LG Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 14040HCY9 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 COF 5817 01 FEB 34 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.