Correlation Between IDJ FINANCIAL and LDG Investment
Can any of the company-specific risk be diversified away by investing in both IDJ FINANCIAL 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 IDJ FINANCIAL and LDG Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IDJ FINANCIAL and LDG Investment JSC, you can compare the effects of market volatilities on IDJ FINANCIAL 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 IDJ FINANCIAL with a short position of LDG Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of IDJ FINANCIAL and LDG Investment.
Diversification Opportunities for IDJ FINANCIAL and LDG Investment
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IDJ and LDG is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding IDJ FINANCIAL 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 IDJ FINANCIAL 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 IDJ FINANCIAL 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 IDJ FINANCIAL i.e., IDJ FINANCIAL and LDG Investment go up and down completely randomly.
Pair Corralation between IDJ FINANCIAL and LDG Investment
Assuming the 90 days trading horizon IDJ FINANCIAL is expected to under-perform the LDG Investment. In addition to that, IDJ FINANCIAL is 2.36 times more volatile than LDG Investment JSC. It trades about -0.19 of its total potential returns per unit of risk. LDG Investment JSC is currently generating about -0.36 per unit of volatility. If you would invest 189,000 in LDG Investment JSC on October 30, 2024 and sell it today you would lose (10,000) from holding LDG Investment JSC or give up 5.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
IDJ FINANCIAL vs. LDG Investment JSC
Performance |
| Timeline |
| IDJ FINANCIAL |
| LDG Investment JSC |
IDJ FINANCIAL and LDG Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IDJ FINANCIAL and LDG Investment
The main advantage of trading using opposite IDJ FINANCIAL and LDG Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IDJ FINANCIAL 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.| IDJ FINANCIAL vs. Din Capital Investment | IDJ FINANCIAL vs. Construction And Investment | IDJ FINANCIAL vs. Thanh Dat Investment | IDJ FINANCIAL vs. Hoang Huy 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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