Correlation Between Long Giang and TDT Investment

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

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

Diversification Opportunities for Long Giang and TDT Investment

0.56

Correlation Coefficient

Long Giang  TDT Investment

Very weak diversification

The 3 months correlation between Long and TDT is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Long Giang Investment and TDT Investment and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TDT Investment and Long Giang 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 Long Giang Investment are associated (or correlated) with TDT Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TDT Investment has no effect on the direction of Long Giang i.e., Long Giang and TDT Investment go up and down completely randomly.

Pair Corralation between Long Giang and TDT Investment

Assuming the 90 days trading horizon Long Giang is expected to generate 1.86 times less return on investment than TDT Investment. In addition to that, Long Giang is 1.84 times more volatile than TDT Investment and. It trades about 0.13 of its total potential returns per unit of risk. TDT Investment and is currently generating about 0.45 per unit of volatility. If you would invest  670,000  in TDT Investment and on October 5, 2024 and sell it today you would earn a total of  60,000  from holding TDT Investment and or generate 8.96% return on investment over 90 days.

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

Long Giang Investment  vs.  TDT Investment and

Long Giang Investment

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Long Giang Investment are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy essential indicators, Long Giang is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

TDT Investment

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in TDT Investment and are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, TDT Investment is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Long Giang and TDT Investment

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

The idea behind Long Giang Investment and TDT Investment and 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.