Correlation Between Materials Petroleum and LDG Investment
Can any of the company-specific risk be diversified away by investing in both Materials Petroleum 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 Materials Petroleum and LDG Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Materials Petroleum JSC and LDG Investment JSC, you can compare the effects of market volatilities on Materials Petroleum 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 Materials Petroleum with a short position of LDG Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Materials Petroleum and LDG Investment.
Diversification Opportunities for Materials Petroleum and LDG Investment
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Materials and LDG is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Materials Petroleum 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 Materials Petroleum 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 Materials Petroleum 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 Materials Petroleum i.e., Materials Petroleum and LDG Investment go up and down completely randomly.
Pair Corralation between Materials Petroleum and LDG Investment
Assuming the 90 days trading horizon Materials Petroleum is expected to generate 1.36 times less return on investment than LDG Investment. In addition to that, Materials Petroleum is 1.81 times more volatile than LDG Investment JSC. It trades about 0.0 of its total potential returns per unit of risk. LDG Investment JSC is currently generating about 0.0 per unit of volatility. If you would invest 186,000 in LDG Investment JSC on September 2, 2024 and sell it today you would lose (2,000) from holding LDG Investment JSC or give up 1.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 78.13% |
| Values | Daily Returns |
Materials Petroleum JSC vs. LDG Investment JSC
Performance |
| Timeline |
| Materials Petroleum JSC |
| LDG Investment JSC |
Materials Petroleum and LDG Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Materials Petroleum and LDG Investment
The main advantage of trading using opposite Materials Petroleum and LDG Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Materials Petroleum 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.| Materials Petroleum vs. Construction And Investment | Materials Petroleum vs. Tien Giang Investment | Materials Petroleum vs. Tng Investment And | Materials Petroleum vs. Techno Agricultural Supplying |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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