Correlation Between LDG Investment and CEO Group

Can any of the company-specific risk be diversified away by investing in both LDG Investment and CEO Group 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 CEO Group 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 CEO Group JSC, you can compare the effects of market volatilities on LDG Investment and CEO Group 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 CEO Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of LDG Investment and CEO Group.

Diversification Opportunities for LDG Investment and CEO Group

0.35

Correlation Coefficient

LDG Investment  CEO Group

Weak diversification

The 3 months correlation between LDG and CEO is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding LDG Investment JSC and CEO Group JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEO Group JSC 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 CEO Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEO Group JSC has no effect on the direction of LDG Investment i.e., LDG Investment and CEO Group go up and down completely randomly.

Pair Corralation between LDG Investment and CEO Group

Assuming the 90 days trading horizon LDG Investment JSC is expected to under-perform the CEO Group. But the stock apears to be less risky and, when comparing its historical volatility, LDG Investment JSC is 1.09 times less risky than CEO Group. The stock trades about -0.05 of its potential returns per unit of risk. The CEO Group JSC is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1,573,674  in CEO Group JSC on October 11, 2024 and sell it today you would lose (373,674) from holding CEO Group JSC or give up 23.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

LDG Investment JSC  vs.  CEO Group JSC

LDG Investment JSC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LDG Investment JSC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, LDG Investment is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

CEO Group JSC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CEO Group JSC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with LDG Investment and CEO Group

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

The idea behind LDG Investment JSC and CEO Group 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.