Correlation Between Turtle Beach and LG Display

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

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

Diversification Opportunities for Turtle Beach and LG Display

-0.45

Correlation Coefficient

Turtle Beach  LG Display

Very good diversification

The 3 months correlation between Turtle and LPL is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Turtle Beach Corp and LG Display Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Display and Turtle Beach 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 Turtle Beach Corp 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 Turtle Beach i.e., Turtle Beach and LG Display go up and down completely randomly.

Pair Corralation between Turtle Beach and LG Display

Given the investment horizon of 90 days Turtle Beach Corp is expected to under-perform the LG Display. But the stock apears to be less risky and, when comparing its historical volatility, Turtle Beach Corp is 1.31 times less risky than LG Display. The stock trades about -0.52 of its potential returns per unit of risk. The LG Display Co is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  420.00  in LG Display Co on January 31, 2024 and sell it today you would lose (14.00) from holding LG Display Co or give up 3.33% of portfolio value over 90 days.

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

Turtle Beach Corp  vs.  LG Display Co

Turtle Beach Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Turtle Beach Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, Turtle Beach reported solid returns over the last few months and may actually be approaching a breakup point.

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 quite persistent basic indicators, LG Display is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Turtle Beach and LG Display

The main advantage of trading using opposite Turtle Beach and LG Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Turtle Beach 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 Turtle Beach Corp 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.