Correlation Between LG Display and Moving IMage

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

Diversification Opportunities for LG Display and Moving IMage

0.55

Correlation Coefficient

LG Display  Moving IMage

Very weak diversification

The 3 months correlation between LPL and Moving is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding LG Display Co and Moving iMage Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moving iMage Technologies 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 Moving IMage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moving iMage Technologies has no effect on the direction of LG Display i.e., LG Display and Moving IMage go up and down completely randomly.

Pair Corralation between LG Display and Moving IMage

Considering the 90-day investment horizon LG Display Co is expected to under-perform the Moving IMage. But the stock apears to be less risky and, when comparing its historical volatility, LG Display Co is 1.61 times less risky than Moving IMage. The stock trades about -0.03 of its potential returns per unit of risk. The Moving iMage Technologies is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  116.00  in Moving iMage Technologies on February 21, 2024 and sell it today you would lose (66.00) from holding Moving iMage Technologies or give up 56.9% of portfolio value over 90 days.

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

LG Display Co  vs.  Moving iMage Technologies

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

Moving iMage Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Moving iMage Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Even with conflicting performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in June 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with LG Display and Moving IMage

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

The idea behind LG Display Co and Moving iMage Technologies 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.