Correlation Between LG Display and Vale SA

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

Diversification Opportunities for LG Display and Vale SA

-0.05

Correlation Coefficient

LG Display  Vale SA

Good diversification

The 3 months correlation between LGA and Vale is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding LG Display Co and Vale SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vale SA 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 Vale SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vale SA has no effect on the direction of LG Display i.e., LG Display and Vale SA go up and down completely randomly.

Pair Corralation between LG Display and Vale SA

Assuming the 90 days horizon LG Display Co is expected to generate 1.27 times more return on investment than Vale SA. However, LG Display is 1.27 times more volatile than Vale SA. It trades about 0.15 of its potential returns per unit of risk. Vale SA is currently generating about 0.02 per unit of risk. If you would invest  238.00  in LG Display Co on April 20, 2025 and sell it today you would earn a total of  50.00  from holding LG Display Co or generate 21.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

LG Display Co  vs.  Vale SA

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 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, LG Display reported solid returns over the last few months and may actually be approaching a breakup point.

Vale SA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vale SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, Vale SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with LG Display and Vale SA

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

The idea behind LG Display Co and Vale SA 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 CEOs Directory module to screen CEOs from public companies around the world.