Correlation Between LG Display and Corsair Gaming

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

Diversification Opportunities for LG Display and Corsair Gaming

0.89

Correlation Coefficient

LG Display  Corsair Gaming

Very poor diversification

The 12 months correlation between LPL and Corsair is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding LG Display Co and Corsair Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corsair Gaming 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 Corsair Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corsair Gaming has no effect on the direction of LG Display i.e., LG Display and Corsair Gaming go up and down completely randomly.

Pair Corralation between LG Display and Corsair Gaming

Considering the 90-day investment horizon LG Display Co is expected to under-perform the Corsair Gaming. In addition to that, LG Display is 1.16 times more volatile than Corsair Gaming. It trades about -0.04 of its total potential returns per unit of risk. Corsair Gaming is currently generating about -0.03 per unit of volatility. If you would invest  1,154  in Corsair Gaming on March 13, 2024 and sell it today you would lose (40.00) from holding Corsair Gaming or give up 3.47% of portfolio value over 90 days.

Time Period	12 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

LG Display Co  vs.  Corsair Gaming

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 inconsistent performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in July 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Corsair Gaming

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Corsair Gaming has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unfluctuating performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with LG Display and Corsair Gaming

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

The idea behind LG Display Co and Corsair Gaming 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.