Correlation Between LDG Investment and Tienlen Steel
Can any of the company-specific risk be diversified away by investing in both LDG Investment and Tienlen Steel 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 Tienlen Steel 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 Tienlen Steel Corp, you can compare the effects of market volatilities on LDG Investment and Tienlen Steel 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 Tienlen Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of LDG Investment and Tienlen Steel.
Diversification Opportunities for LDG Investment and Tienlen Steel
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between LDG and Tienlen is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding LDG Investment JSC and Tienlen Steel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tienlen Steel Corp 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 Tienlen Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tienlen Steel Corp has no effect on the direction of LDG Investment i.e., LDG Investment and Tienlen Steel go up and down completely randomly.
Pair Corralation between LDG Investment and Tienlen Steel
Assuming the 90 days trading horizon LDG Investment JSC is expected to generate 1.5 times more return on investment than Tienlen Steel. However, LDG Investment is 1.5 times more volatile than Tienlen Steel Corp. It trades about -0.15 of its potential returns per unit of risk. Tienlen Steel Corp is currently generating about -0.37 per unit of risk. If you would invest 214,000 in LDG Investment JSC on August 28, 2024 and sell it today you would lose (29,000) from holding LDG Investment JSC or give up 13.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.67% |
| Values | Daily Returns |
LDG Investment JSC vs. Tienlen Steel Corp
Performance |
| Timeline |
| LDG Investment JSC |
| Tienlen Steel Corp |
LDG Investment and Tienlen Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LDG Investment and Tienlen Steel
The main advantage of trading using opposite LDG Investment and Tienlen Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LDG Investment position performs unexpectedly, Tienlen Steel 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 Tienlen Steel will offset losses from the drop in Tienlen Steel'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 |
| Tienlen Steel vs. FIT INVEST JSC | Tienlen Steel vs. Damsan JSC | Tienlen Steel vs. An Phat Plastic | Tienlen Steel 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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