Correlation Between Transport and LDG Investment
Can any of the company-specific risk be diversified away by investing in both Transport 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 Transport and LDG Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transport and Industry and LDG Investment JSC, you can compare the effects of market volatilities on Transport 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 Transport with a short position of LDG Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transport and LDG Investment.
Diversification Opportunities for Transport and LDG Investment
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Transport and LDG is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Transport and Industry 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 Transport 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 Transport and Industry 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 Transport i.e., Transport and LDG Investment go up and down completely randomly.
Pair Corralation between Transport and LDG Investment
Assuming the 90 days trading horizon Transport and Industry is expected to generate 1.86 times more return on investment than LDG Investment. However, Transport is 1.86 times more volatile than LDG Investment JSC. It trades about -0.06 of its potential returns per unit of risk. LDG Investment JSC is currently generating about -0.55 per unit of risk. If you would invest 446,000 in Transport and Industry on November 7, 2024 and sell it today you would lose (7,000) from holding Transport and Industry or give up 1.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 88.89% |
| Values | Daily Returns |
Transport and Industry vs. LDG Investment JSC
Performance |
| Timeline |
| Transport and Industry |
| LDG Investment JSC |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Transport and LDG Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transport and LDG Investment
The main advantage of trading using opposite Transport and LDG Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transport 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.| Transport vs. Damsan JSC | Transport vs. Binhthuan Agriculture Services | Transport vs. Bentre Aquaproduct Import |
| LDG Investment vs. Damsan JSC | LDG Investment vs. Binhthuan Agriculture Services | LDG Investment vs. Bentre Aquaproduct Import |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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