Correlation Between UTime and LG Display

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

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

Diversification Opportunities for UTime and LG Display

0.34

Correlation Coefficient

UTime  LG Display

Weak diversification

The 3 months correlation between UTime and LPL is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding UTime Limited and LG Display Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Display and UTime 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 UTime Limited 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 UTime i.e., UTime and LG Display go up and down completely randomly.

Pair Corralation between UTime and LG Display

Considering the 90-day investment horizon UTime Limited is expected to under-perform the LG Display. In addition to that, UTime is 3.68 times more volatile than LG Display Co. It trades about -0.28 of its total potential returns per unit of risk. LG Display Co is currently generating about -0.07 per unit of volatility. If you would invest  380.00  in LG Display Co on September 4, 2024 and sell it today you would lose (40.00) from holding LG Display Co or give up 10.53% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

UTime Limited  vs.  LG Display Co

UTime Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UTime Limited 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 basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm 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 latest weak performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with UTime and LG Display

The main advantage of trading using opposite UTime and LG Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UTime 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 UTime Limited 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.