Correlation Between Post and LDG Investment

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

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

Diversification Opportunities for Post and LDG Investment

0.27

Correlation Coefficient

Post  LDG Investment

Modest diversification

The 3 months correlation between Post and LDG is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Post and Telecommunications 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 Post 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 Post and Telecommunications 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 Post i.e., Post and LDG Investment go up and down completely randomly.

Pair Corralation between Post and LDG Investment

Assuming the 90 days trading horizon Post and Telecommunications is expected to under-perform the LDG Investment. But the stock apears to be less risky and, when comparing its historical volatility, Post and Telecommunications is 1.11 times less risky than LDG Investment. The stock trades about -0.05 of its potential returns per unit of risk. The LDG Investment JSC is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  181,000  in LDG Investment JSC on September 14, 2024 and sell it today you would earn a total of  8,000  from holding LDG Investment JSC or generate 4.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Post and Telecommunications  vs.  LDG Investment JSC

Post and Telecommuni

Risk-Adjusted Performance

0 of 100

Very Weak

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

LDG Investment JSC

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in LDG Investment JSC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with Post and LDG Investment

The main advantage of trading using opposite Post and LDG Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Post 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 Post and Telecommunications 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.