Correlation Between Damsan JSC and LDG Investment
Can any of the company-specific risk be diversified away by investing in both Damsan JSC and LDG Investment 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 Damsan JSC and LDG Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Damsan JSC and LDG Investment JSC, you can compare the effects of market volatilities on Damsan JSC and LDG Investment 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 Damsan JSC with a short position of LDG Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Damsan JSC and LDG Investment.
Diversification Opportunities for Damsan JSC and LDG Investment
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Damsan and LDG is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Damsan JSC and LDG Investment JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LDG Investment JSC and Damsan JSC 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 Damsan JSC are associated (or correlated) with LDG Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LDG Investment JSC has no effect on the direction of Damsan JSC i.e., Damsan JSC and LDG Investment go up and down completely randomly.
Pair Corralation between Damsan JSC and LDG Investment
Assuming the 90 days trading horizon Damsan JSC is expected to under-perform the LDG Investment. But the stock apears to be less risky and, when comparing its historical volatility, Damsan JSC is 1.09 times less risky than LDG Investment. The stock trades about -0.17 of its potential returns per unit of risk. The LDG Investment JSC is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 190,000 in LDG Investment JSC on August 25, 2024 and sell it today you would lose (5,000) from holding LDG Investment JSC or give up 2.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Damsan JSC vs. LDG Investment JSC
Performance |
| Timeline |
| Damsan JSC |
| LDG Investment JSC |
Damsan JSC and LDG Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Damsan JSC and LDG Investment
The main advantage of trading using opposite Damsan JSC and LDG Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Damsan JSC position performs unexpectedly, LDG Investment 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 LDG Investment will offset losses from the drop in LDG Investment's long position.| Damsan JSC vs. Post and Telecommunications | Damsan JSC vs. Dinhvu Port Investment | Damsan JSC vs. Sea Air Freight | Damsan JSC vs. Vu Dang Investment |
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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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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