Correlation Between LDG Investment and PV2 Investment
Can any of the company-specific risk be diversified away by investing in both LDG Investment and PV2 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 LDG Investment and PV2 Investment 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 PV2 Investment JSC, you can compare the effects of market volatilities on LDG Investment and PV2 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 LDG Investment with a short position of PV2 Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of LDG Investment and PV2 Investment.
Diversification Opportunities for LDG Investment and PV2 Investment
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between LDG and PV2 is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding LDG Investment JSC and PV2 Investment JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PV2 Investment 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 PV2 Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PV2 Investment JSC has no effect on the direction of LDG Investment i.e., LDG Investment and PV2 Investment go up and down completely randomly.
Pair Corralation between LDG Investment and PV2 Investment
Assuming the 90 days trading horizon LDG Investment JSC is expected to under-perform the PV2 Investment. But the stock apears to be less risky and, when comparing its historical volatility, LDG Investment JSC is 1.17 times less risky than PV2 Investment. The stock trades about -0.08 of its potential returns per unit of risk. The PV2 Investment JSC is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 280,000 in PV2 Investment JSC on August 25, 2024 and sell it today you would lose (40,000) from holding PV2 Investment JSC or give up 14.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.63% |
| Values | Daily Returns |
LDG Investment JSC vs. PV2 Investment JSC
Performance |
| Timeline |
| LDG Investment JSC |
| PV2 Investment JSC |
LDG Investment and PV2 Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LDG Investment and PV2 Investment
The main advantage of trading using opposite LDG Investment and PV2 Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LDG Investment position performs unexpectedly, PV2 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 PV2 Investment will offset losses from the drop in PV2 Investment'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 |
| PV2 Investment vs. FIT INVEST JSC | PV2 Investment vs. Damsan JSC | PV2 Investment vs. An Phat Plastic | PV2 Investment 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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