Correlation Between DOMESCO Medical and LDG Investment

Can any of the company-specific risk be diversified away by investing in both DOMESCO Medical 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 DOMESCO Medical and LDG Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DOMESCO Medical Import and LDG Investment JSC, you can compare the effects of market volatilities on DOMESCO Medical 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 DOMESCO Medical with a short position of LDG Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of DOMESCO Medical and LDG Investment.

Diversification Opportunities for DOMESCO Medical and LDG Investment

-0.05

Correlation Coefficient

DOMESCO Medical  LDG Investment

Good diversification

The 3 months correlation between DOMESCO and LDG is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding DOMESCO Medical Import 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 DOMESCO Medical 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 DOMESCO Medical Import 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 DOMESCO Medical i.e., DOMESCO Medical and LDG Investment go up and down completely randomly.

Pair Corralation between DOMESCO Medical and LDG Investment

Assuming the 90 days trading horizon DOMESCO Medical Import is expected to generate 0.73 times more return on investment than LDG Investment. However, DOMESCO Medical Import is 1.36 times less risky than LDG Investment. It trades about 0.07 of its potential returns per unit of risk. LDG Investment JSC is currently generating about -0.03 per unit of risk. If you would invest  4,169,476  in DOMESCO Medical Import on December 5, 2024 and sell it today you would earn a total of  2,680,524  from holding DOMESCO Medical Import or generate 64.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.63%
Values	Daily Returns

DOMESCO Medical Import  vs.  LDG Investment JSC

DOMESCO Medical Import

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in DOMESCO Medical Import are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, DOMESCO Medical may actually be approaching a critical reversion point that can send shares even higher in April 2025.

LDG Investment JSC

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in LDG Investment JSC are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, LDG Investment displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DOMESCO Medical and LDG Investment

The main advantage of trading using opposite DOMESCO Medical and LDG Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DOMESCO Medical 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.

The idea behind DOMESCO Medical Import and LDG Investment JSC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.