Correlation Between Din Capital and LDG Investment
Can any of the company-specific risk be diversified away by investing in both Din Capital 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 Din Capital and LDG Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Din Capital Investment and LDG Investment JSC, you can compare the effects of market volatilities on Din Capital 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 Din Capital with a short position of LDG Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Din Capital and LDG Investment.
Diversification Opportunities for Din Capital and LDG Investment
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Din and LDG is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Din Capital Investment 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 Din Capital 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 Din Capital Investment 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 Din Capital i.e., Din Capital and LDG Investment go up and down completely randomly.
Pair Corralation between Din Capital and LDG Investment
Assuming the 90 days trading horizon Din Capital Investment is expected to generate 0.76 times more return on investment than LDG Investment. However, Din Capital Investment is 1.32 times less risky than LDG Investment. It trades about 0.06 of its potential returns per unit of risk. LDG Investment JSC is currently generating about -0.04 per unit of risk. If you would invest 930,000 in Din Capital Investment on August 28, 2024 and sell it today you would earn a total of 50,000 from holding Din Capital Investment or generate 5.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 87.1% |
| Values | Daily Returns |
Din Capital Investment vs. LDG Investment JSC
Performance |
| Timeline |
| Din Capital Investment |
| LDG Investment JSC |
Din Capital and LDG Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Din Capital and LDG Investment
The main advantage of trading using opposite Din Capital and LDG Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Din Capital 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.| Din Capital vs. Hai An Transport | Din Capital vs. Dinhvu Port Investment | Din Capital vs. MST Investment JSC | Din Capital vs. Pacific Petroleum Transportation |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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