Correlation Between LG Display and Benchmark Electronics
Can any of the company-specific risk be diversified away by investing in both LG Display and Benchmark Electronics 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 Benchmark Electronics 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 Benchmark Electronics, you can compare the effects of market volatilities on LG Display and Benchmark Electronics 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 Benchmark Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Display and Benchmark Electronics.
Diversification Opportunities for LG Display and Benchmark Electronics
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between LPL and Benchmark is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding LG Display Co and Benchmark Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Benchmark Electronics 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 Benchmark Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Benchmark Electronics has no effect on the direction of LG Display i.e., LG Display and Benchmark Electronics go up and down completely randomly.
Pair Corralation between LG Display and Benchmark Electronics
Considering the 90-day investment horizon LG Display Co is expected to generate 1.89 times more return on investment than Benchmark Electronics. However, LG Display is 1.89 times more volatile than Benchmark Electronics. It trades about 0.16 of its potential returns per unit of risk. Benchmark Electronics is currently generating about 0.11 per unit of risk. If you would invest 314.00 in LG Display Co on May 28, 2025 and sell it today you would earn a total of 115.00 from holding LG Display Co or generate 36.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Display Co vs. Benchmark Electronics
Performance |
| Timeline |
| LG Display |
| Benchmark Electronics |
LG Display and Benchmark Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Display and Benchmark Electronics
The main advantage of trading using opposite LG Display and Benchmark Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Display position performs unexpectedly, Benchmark Electronics 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 Benchmark Electronics will offset losses from the drop in Benchmark Electronics' long position.| LG Display vs. Universal Electronics | LG Display vs. Samsung Electronics Co | LG Display vs. Sony Group Corp | LG Display vs. Korea Electric Power |
| Benchmark Electronics vs. Sanmina | Benchmark Electronics vs. Methode Electronics | Benchmark Electronics vs. OSI Systems | Benchmark Electronics vs. Celestica |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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