Correlation Between LG Electronics and Datadog
Can any of the company-specific risk be diversified away by investing in both LG Electronics and Datadog 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 LG Electronics and Datadog into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Electronics and Datadog, you can compare the effects of market volatilities on LG Electronics and Datadog 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 LG Electronics with a short position of Datadog. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Electronics and Datadog.
Diversification Opportunities for LG Electronics and Datadog
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between LGLG and Datadog is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding LG Electronics and Datadog in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Datadog and LG Electronics 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 LG Electronics are associated (or correlated) with Datadog. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Datadog has no effect on the direction of LG Electronics i.e., LG Electronics and Datadog go up and down completely randomly.
Pair Corralation between LG Electronics and Datadog
Assuming the 90 days trading horizon LG Electronics is expected to under-perform the Datadog. But the stock apears to be less risky and, when comparing its historical volatility, LG Electronics is 1.24 times less risky than Datadog. The stock trades about -0.06 of its potential returns per unit of risk. The Datadog is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 11,768 in Datadog on August 27, 2024 and sell it today you would earn a total of 2,960 from holding Datadog or generate 25.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Electronics vs. Datadog
Performance |
| Timeline |
| LG Electronics |
| Datadog |
LG Electronics and Datadog Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Electronics and Datadog
The main advantage of trading using opposite LG Electronics and Datadog positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Electronics position performs unexpectedly, Datadog 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 Datadog will offset losses from the drop in Datadog's long position.| LG Electronics vs. Datadog | LG Electronics vs. Molson Coors Beverage | LG Electronics vs. TERADATA | LG Electronics vs. National Beverage Corp |
| Datadog vs. Compugroup Medical SE | Datadog vs. TreeHouse Foods | Datadog vs. United Natural Foods | Datadog vs. IMAGIN MEDICAL INC |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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