Correlation Between LG Display and Koss

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

Diversification Opportunities for LG Display and Koss

0.87

Correlation Coefficient

LG Display  Koss

Very poor diversification

The 3 months correlation between LPL and Koss is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding LG Display Co and Koss Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Koss 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 Koss. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Koss has no effect on the direction of LG Display i.e., LG Display and Koss go up and down completely randomly.

Pair Corralation between LG Display and Koss

Considering the 90-day investment horizon LG Display Co is expected to generate 1.22 times more return on investment than Koss. However, LG Display is 1.22 times more volatile than Koss Corporation. It trades about -0.04 of its potential returns per unit of risk. Koss Corporation is currently generating about -0.18 per unit of risk. If you would invest  415.00  in LG Display Co on January 26, 2024 and sell it today you would lose (10.00) from holding LG Display Co or give up 2.41% of portfolio value over 90 days.

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

LG Display Co  vs.  Koss Corp.

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.

Koss

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Koss Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in May 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with LG Display and Koss

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

The idea behind LG Display Co and Koss Corporation 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.