Correlation Between Development Investment and LDG Investment
Can any of the company-specific risk be diversified away by investing in both Development 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 Development 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 Development Investment Construction and LDG Investment JSC, you can compare the effects of market volatilities on Development 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 Development Investment with a short position of LDG Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Development Investment and LDG Investment.
Diversification Opportunities for Development Investment and LDG Investment
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Development and LDG is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Development Investment Constru 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 Development 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 Development Investment Construction 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 Development Investment i.e., Development Investment and LDG Investment go up and down completely randomly.
Pair Corralation between Development Investment and LDG Investment
Assuming the 90 days trading horizon Development Investment Construction is expected to generate 1.0 times more return on investment than LDG Investment. However, Development Investment Construction is 1.0 times less risky than LDG Investment. It trades about -0.05 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 2,426,087 in Development Investment Construction on August 29, 2024 and sell it today you would lose (876,087) from holding Development Investment Construction or give up 36.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 92.04% |
| Values | Daily Returns |
Development Investment Constru vs. LDG Investment JSC
Performance |
| Timeline |
| Development Investment |
| LDG Investment JSC |
Development Investment and LDG Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Development Investment and LDG Investment
The main advantage of trading using opposite Development Investment and LDG Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Development 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.| Development Investment vs. FIT INVEST JSC | Development Investment vs. Damsan JSC | Development Investment vs. An Phat Plastic | Development 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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