Correlation Between LG Display and Iwatani

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

Diversification Opportunities for LG Display and Iwatani

0.9

Correlation Coefficient

LG Display  Iwatani

Almost no diversification

The 3 months correlation between LGA and Iwatani is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding LG Display Co and Iwatani in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iwatani 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 Iwatani. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iwatani has no effect on the direction of LG Display i.e., LG Display and Iwatani go up and down completely randomly.

Pair Corralation between LG Display and Iwatani

Assuming the 90 days horizon LG Display Co is expected to generate 1.14 times more return on investment than Iwatani. However, LG Display is 1.14 times more volatile than Iwatani. It trades about -0.15 of its potential returns per unit of risk. Iwatani is currently generating about -0.19 per unit of risk. If you would invest  364.00  in LG Display Co on September 22, 2024 and sell it today you would lose (60.00) from holding LG Display Co or give up 16.48% of portfolio value over 90 days.

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

LG Display Co  vs.  Iwatani

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 fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Iwatani

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Iwatani has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with LG Display and Iwatani

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

The idea behind LG Display Co and Iwatani 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.