Correlation Between Tienlen Steel and LDG Investment
Can any of the company-specific risk be diversified away by investing in both Tienlen Steel 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 Tienlen Steel and LDG Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tienlen Steel Corp and LDG Investment JSC, you can compare the effects of market volatilities on Tienlen Steel 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 Tienlen Steel with a short position of LDG Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tienlen Steel and LDG Investment.
Diversification Opportunities for Tienlen Steel and LDG Investment
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Tienlen and LDG is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Tienlen Steel 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 Tienlen Steel 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 Tienlen Steel 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 Tienlen Steel i.e., Tienlen Steel and LDG Investment go up and down completely randomly.
Pair Corralation between Tienlen Steel and LDG Investment
Assuming the 90 days trading horizon Tienlen Steel Corp is expected to under-perform the LDG Investment. But the stock apears to be less risky and, when comparing its historical volatility, Tienlen Steel Corp is 1.36 times less risky than LDG Investment. The stock trades about -0.57 of its potential returns per unit of risk. The LDG Investment JSC is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 190,000 in LDG Investment JSC on August 28, 2024 and sell it today you would lose (5,000) from holding LDG Investment JSC or give up 2.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Tienlen Steel Corp vs. LDG Investment JSC
Performance |
| Timeline |
| Tienlen Steel Corp |
| LDG Investment JSC |
Tienlen Steel and LDG Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tienlen Steel and LDG Investment
The main advantage of trading using opposite Tienlen Steel and LDG Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tienlen Steel 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.| Tienlen Steel vs. FIT INVEST JSC | Tienlen Steel vs. Damsan JSC | Tienlen Steel vs. An Phat Plastic | Tienlen Steel vs. APG Securities Joint |
| LDG Investment vs. FIT INVEST JSC | LDG Investment vs. Damsan JSC | LDG Investment vs. An Phat Plastic | LDG Investment 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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