Correlation Between LDG Investment and SCG Construction
Can any of the company-specific risk be diversified away by investing in both LDG Investment and SCG Construction 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 SCG Construction 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 SCG Construction JSC, you can compare the effects of market volatilities on LDG Investment and SCG Construction 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 SCG Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of LDG Investment and SCG Construction.
Diversification Opportunities for LDG Investment and SCG Construction
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between LDG and SCG is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding LDG Investment JSC and SCG Construction JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCG Construction 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 SCG Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCG Construction JSC has no effect on the direction of LDG Investment i.e., LDG Investment and SCG Construction go up and down completely randomly.
Pair Corralation between LDG Investment and SCG Construction
Assuming the 90 days trading horizon LDG Investment JSC is expected to under-perform the SCG Construction. In addition to that, LDG Investment is 2.41 times more volatile than SCG Construction JSC. It trades about -0.14 of its total potential returns per unit of risk. SCG Construction JSC is currently generating about 0.07 per unit of volatility. If you would invest 6,480,000 in SCG Construction JSC on November 8, 2024 and sell it today you would earn a total of 30,000 from holding SCG Construction JSC or generate 0.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LDG Investment JSC vs. SCG Construction JSC
Performance |
| Timeline |
| LDG Investment JSC |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| SCG Construction JSC |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
LDG Investment and SCG Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LDG Investment and SCG Construction
The main advantage of trading using opposite LDG Investment and SCG Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LDG Investment position performs unexpectedly, SCG Construction 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 SCG Construction will offset losses from the drop in SCG Construction's long position.The idea behind LDG Investment JSC and SCG Construction JSC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Stocks Directory module to find actively traded stocks across global markets.
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