Correlation Between Mohawk Group and LG Display

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

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

Diversification Opportunities for Mohawk Group and LG Display

0.0

Correlation Coefficient

Mohawk Group  LG Display

Pay attention - limited upside

The 3 months correlation between Mohawk and LPL is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Mohawk Group Holdings and LG Display Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Display and Mohawk Group 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 Mohawk Group Holdings 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 Mohawk Group i.e., Mohawk Group and LG Display go up and down completely randomly.

Pair Corralation between Mohawk Group and LG Display

If you would invest (100.00) in Mohawk Group Holdings on January 20, 2024 and sell it today you would earn a total of  100.00  from holding Mohawk Group Holdings or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Mohawk Group Holdings  vs.  LG Display Co

Mohawk Group Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mohawk Group Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Mohawk Group is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional 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 uncertain performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in May 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Mohawk Group and LG Display

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

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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 Stocks Directory module to find actively traded stocks across global markets.