Correlation Between Lamar Advertising and Datang International
Can any of the company-specific risk be diversified away by investing in both Lamar Advertising and Datang International 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 Lamar Advertising and Datang International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lamar Advertising and Datang International Power, you can compare the effects of market volatilities on Lamar Advertising and Datang International 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 Lamar Advertising with a short position of Datang International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lamar Advertising and Datang International.
Diversification Opportunities for Lamar Advertising and Datang International
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lamar and Datang is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Lamar Advertising and Datang International Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Datang International and Lamar Advertising 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 Lamar Advertising are associated (or correlated) with Datang International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Datang International has no effect on the direction of Lamar Advertising i.e., Lamar Advertising and Datang International go up and down completely randomly.
Pair Corralation between Lamar Advertising and Datang International
Assuming the 90 days trading horizon Lamar Advertising is expected to generate 0.73 times more return on investment than Datang International. However, Lamar Advertising is 1.37 times less risky than Datang International. It trades about -0.01 of its potential returns per unit of risk. Datang International Power is currently generating about -0.21 per unit of risk. If you would invest 12,500 in Lamar Advertising on August 26, 2024 and sell it today you would lose (100.00) from holding Lamar Advertising or give up 0.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lamar Advertising vs. Datang International Power
Performance |
| Timeline |
| Lamar Advertising |
| Datang International |
Lamar Advertising and Datang International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lamar Advertising and Datang International
The main advantage of trading using opposite Lamar Advertising and Datang International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lamar Advertising position performs unexpectedly, Datang International 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 Datang International will offset losses from the drop in Datang International's long position.| Lamar Advertising vs. Apple Inc | Lamar Advertising vs. Apple Inc | Lamar Advertising vs. Apple Inc | Lamar Advertising vs. Apple Inc |
| Datang International vs. Lamar Advertising | Datang International vs. Coor Service Management | Datang International vs. United Rentals | Datang International vs. MUTUIONLINE |
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 Stocks Directory module to find actively traded stocks across global markets.
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