Correlation Between LDG Investment and Bao Ngoc

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

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

Diversification Opportunities for LDG Investment and Bao Ngoc

-0.22

Correlation Coefficient

LDG Investment  Bao Ngoc

Very good diversification

The 3 months correlation between LDG and Bao is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding LDG Investment JSC and Bao Ngoc Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bao Ngoc Investment and LDG Investment 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 LDG Investment JSC are associated (or correlated) with Bao Ngoc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bao Ngoc Investment has no effect on the direction of LDG Investment i.e., LDG Investment and Bao Ngoc go up and down completely randomly.

Pair Corralation between LDG Investment and Bao Ngoc

Assuming the 90 days trading horizon LDG Investment JSC is expected to under-perform the Bao Ngoc. In addition to that, LDG Investment is 1.04 times more volatile than Bao Ngoc Investment. It trades about -0.03 of its total potential returns per unit of risk. Bao Ngoc Investment is currently generating about 0.02 per unit of volatility. If you would invest  784,000  in Bao Ngoc Investment on December 5, 2024 and sell it today you would earn a total of  96,000  from holding Bao Ngoc Investment or generate 12.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

LDG Investment JSC  vs.  Bao Ngoc Investment

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.

Bao Ngoc Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bao Ngoc Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with LDG Investment and Bao Ngoc

The main advantage of trading using opposite LDG Investment and Bao Ngoc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LDG Investment position performs unexpectedly, Bao Ngoc 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 Bao Ngoc will offset losses from the drop in Bao Ngoc's long position.

The idea behind LDG Investment JSC and Bao Ngoc Investment 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.