Correlation Between CMC Investment and LDG Investment
Can any of the company-specific risk be diversified away by investing in both CMC Investment 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 CMC Investment and LDG Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CMC Investment JSC and LDG Investment JSC, you can compare the effects of market volatilities on CMC Investment 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 CMC Investment with a short position of LDG Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of CMC Investment and LDG Investment.
Diversification Opportunities for CMC Investment and LDG Investment
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between CMC and LDG is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding CMC Investment 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 CMC Investment 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 CMC Investment 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 CMC Investment i.e., CMC Investment and LDG Investment go up and down completely randomly.
Pair Corralation between CMC Investment and LDG Investment
Assuming the 90 days trading horizon CMC Investment JSC is expected to generate 2.21 times more return on investment than LDG Investment. However, CMC Investment is 2.21 times more volatile than LDG Investment JSC. It trades about 0.02 of its potential returns per unit of risk. LDG Investment JSC is currently generating about -0.09 per unit of risk. If you would invest 620,000 in CMC Investment JSC on August 29, 2024 and sell it today you would lose (20,000) from holding CMC Investment JSC or give up 3.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 66.09% |
| Values | Daily Returns |
CMC Investment JSC vs. LDG Investment JSC
Performance |
| Timeline |
| CMC Investment JSC |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| LDG Investment JSC |
CMC Investment and LDG Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CMC Investment and LDG Investment
The main advantage of trading using opposite CMC Investment and LDG Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CMC Investment 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.| CMC Investment vs. FIT INVEST JSC | CMC Investment vs. Damsan JSC | CMC Investment vs. An Phat Plastic | CMC Investment vs. Alphanam ME |
| LDG Investment vs. FIT INVEST JSC | LDG Investment vs. Damsan JSC | LDG Investment vs. An Phat Plastic | LDG Investment vs. Alphanam ME |
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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