Correlation Between LG Display and Daktronics

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

Diversification Opportunities for LG Display and Daktronics

0.63

Correlation Coefficient

LG Display  Daktronics

Poor diversification

The 3 months correlation between LPL and Daktronics is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding LG Display Co and Daktronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daktronics 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 Daktronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daktronics has no effect on the direction of LG Display i.e., LG Display and Daktronics go up and down completely randomly.

Pair Corralation between LG Display and Daktronics

Considering the 90-day investment horizon LG Display Co is expected to generate 0.76 times more return on investment than Daktronics. However, LG Display Co is 1.32 times less risky than Daktronics. It trades about 0.18 of its potential returns per unit of risk. Daktronics is currently generating about 0.11 per unit of risk. If you would invest  305.00  in LG Display Co on May 4, 2025 and sell it today you would earn a total of  83.00  from holding LG Display Co or generate 27.21% return on investment over 90 days.

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

LG Display Co  vs.  Daktronics

LG Display

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in LG Display Co are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, LG Display disclosed solid returns over the last few months and may actually be approaching a breakup point.

Daktronics

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Daktronics are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak forward-looking signals, Daktronics unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LG Display and Daktronics

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

The idea behind LG Display Co and Daktronics 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.