Correlation Between Aterian and LG Display

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

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

Diversification Opportunities for Aterian and LG Display

0.26

Correlation Coefficient

Aterian  LG Display

Modest diversification

The 3 months correlation between Aterian and LPL is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Aterian and LG Display Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Display and Aterian 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 Aterian 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 Aterian i.e., Aterian and LG Display go up and down completely randomly.

Pair Corralation between Aterian and LG Display

Given the investment horizon of 90 days Aterian is expected to under-perform the LG Display. In addition to that, Aterian is 2.89 times more volatile than LG Display Co. It trades about -0.22 of its total potential returns per unit of risk. LG Display Co is currently generating about -0.04 per unit of volatility. If you would invest  410.00  in LG Display Co on January 25, 2024 and sell it today you would lose (9.00) from holding LG Display Co or give up 2.2% of portfolio value over 90 days.

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

Aterian  vs.  LG Display Co

Aterian

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aterian has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in May 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail 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 Aterian and LG Display

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

Check out your portfolio center.

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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.