Correlation Between Apple and LG Display

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

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

Diversification Opportunities for Apple and LG Display

0.0

Correlation Coefficient

Apple  LG Display

Pay attention - limited upside

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

Pair Corralation between Apple and LG Display

Given the investment horizon of 90 days Apple Inc is expected to generate 0.52 times more return on investment than LG Display. However, Apple Inc is 1.94 times less risky than LG Display. It trades about -0.03 of its potential returns per unit of risk. LG Display Co is currently generating about -0.11 per unit of risk. If you would invest  22,879  in Apple Inc on August 11, 2024 and sell it today you would lose (183.00) from holding Apple Inc or give up 0.8% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Apple Inc  vs.  LG Display Co

Apple Inc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Apple 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 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.

Pair Trading with Apple and LG Display

The main advantage of trading using opposite Apple and LG Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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 Apple Inc 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.