Correlation Between Lion Biotechnologies and LG Display
Can any of the company-specific risk be diversified away by investing in both Lion Biotechnologies 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 Lion Biotechnologies and LG Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lion Biotechnologies and LG Display Co, you can compare the effects of market volatilities on Lion Biotechnologies 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 Lion Biotechnologies with a short position of LG Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion Biotechnologies and LG Display.
Diversification Opportunities for Lion Biotechnologies and LG Display
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lion and LGA is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Lion Biotechnologies and LG Display Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Display and Lion Biotechnologies 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 Lion Biotechnologies 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 Lion Biotechnologies i.e., Lion Biotechnologies and LG Display go up and down completely randomly.
Pair Corralation between Lion Biotechnologies and LG Display
Assuming the 90 days trading horizon Lion Biotechnologies is expected to generate 2.43 times more return on investment than LG Display. However, Lion Biotechnologies is 2.43 times more volatile than LG Display Co. It trades about 0.03 of its potential returns per unit of risk. LG Display Co is currently generating about -0.02 per unit of risk. If you would invest 605.00 in Lion Biotechnologies on September 23, 2024 and sell it today you would earn a total of 86.00 from holding Lion Biotechnologies or generate 14.21% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Lion Biotechnologies vs. LG Display Co
Performance |
Timeline |
Lion Biotechnologies |
LG Display |
Lion Biotechnologies and LG Display Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lion Biotechnologies and LG Display
The main advantage of trading using opposite Lion Biotechnologies and LG Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion Biotechnologies 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.Lion Biotechnologies vs. National Retail Properties | Lion Biotechnologies vs. SHIP HEALTHCARE HLDGINC | Lion Biotechnologies vs. BJs Wholesale Club | Lion Biotechnologies vs. Natural Health Trends |
LG Display vs. Apple Inc | LG Display vs. Apple Inc | LG Display vs. Samsung Electronics Co | LG Display vs. Samsung Electronics Co |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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