Correlation Between Military Insurance and LDG Investment
Can any of the company-specific risk be diversified away by investing in both Military Insurance and LDG 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 Military Insurance and LDG Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Military Insurance Corp and LDG Investment JSC, you can compare the effects of market volatilities on Military Insurance and LDG 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 Military Insurance with a short position of LDG Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Military Insurance and LDG Investment.
Diversification Opportunities for Military Insurance and LDG Investment
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Military and LDG is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Military Insurance Corp and LDG Investment JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LDG Investment JSC and Military Insurance 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 Military Insurance Corp are associated (or correlated) with LDG Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LDG Investment JSC has no effect on the direction of Military Insurance i.e., Military Insurance and LDG Investment go up and down completely randomly.
Pair Corralation between Military Insurance and LDG Investment
Assuming the 90 days trading horizon Military Insurance Corp is expected to generate 0.86 times more return on investment than LDG Investment. However, Military Insurance Corp is 1.17 times less risky than LDG Investment. It trades about 0.01 of its potential returns per unit of risk. LDG Investment JSC is currently generating about -0.08 per unit of risk. If you would invest 1,656,404 in Military Insurance Corp on August 31, 2024 and sell it today you would earn a total of 38,596 from holding Military Insurance Corp or generate 2.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Military Insurance Corp vs. LDG Investment JSC
Performance |
| Timeline |
| Military Insurance Corp |
| LDG Investment JSC |
Military Insurance and LDG Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Military Insurance and LDG Investment
The main advantage of trading using opposite Military Insurance and LDG Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Military Insurance position performs unexpectedly, LDG 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 LDG Investment will offset losses from the drop in LDG Investment's long position.| Military Insurance vs. FIT INVEST JSC | Military Insurance vs. Damsan JSC | Military Insurance vs. An Phat Plastic | Military Insurance vs. Alphanam ME |
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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