Correlation Between LDG Investment and Nafoods Group
Can any of the company-specific risk be diversified away by investing in both LDG Investment and Nafoods Group 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 LDG Investment and Nafoods Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LDG Investment JSC and Nafoods Group JSC, you can compare the effects of market volatilities on LDG Investment and Nafoods Group 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 LDG Investment with a short position of Nafoods Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of LDG Investment and Nafoods Group.
Diversification Opportunities for LDG Investment and Nafoods Group
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between LDG and Nafoods is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding LDG Investment JSC and Nafoods Group JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nafoods Group JSC and LDG 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 LDG Investment JSC are associated (or correlated) with Nafoods Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nafoods Group JSC has no effect on the direction of LDG Investment i.e., LDG Investment and Nafoods Group go up and down completely randomly.
Pair Corralation between LDG Investment and Nafoods Group
Assuming the 90 days trading horizon LDG Investment JSC is expected to generate 0.85 times more return on investment than Nafoods Group. However, LDG Investment JSC is 1.18 times less risky than Nafoods Group. It trades about -0.06 of its potential returns per unit of risk. Nafoods Group JSC is currently generating about -0.14 per unit of risk. If you would invest 190,000 in LDG Investment JSC on August 26, 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 |
LDG Investment JSC vs. Nafoods Group JSC
Performance |
| Timeline |
| LDG Investment JSC |
| Nafoods Group JSC |
LDG Investment and Nafoods Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LDG Investment and Nafoods Group
The main advantage of trading using opposite LDG Investment and Nafoods Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LDG Investment position performs unexpectedly, Nafoods Group 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 Nafoods Group will offset losses from the drop in Nafoods Group's long position.| LDG Investment vs. FIT INVEST JSC | LDG Investment vs. Damsan JSC | LDG Investment vs. An Phat Plastic | LDG Investment vs. APG Securities Joint |
| Nafoods Group vs. FIT INVEST JSC | Nafoods Group vs. Damsan JSC | Nafoods Group vs. An Phat Plastic | Nafoods Group vs. APG Securities Joint |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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