Correlation Between TDG Global and Damsan JSC

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

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

Diversification Opportunities for TDG Global and Damsan JSC

0.7

Correlation Coefficient

TDG Global  Damsan JSC

Poor diversification

The 3 months correlation between TDG and Damsan is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding TDG Global Investment and Damsan JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Damsan JSC and TDG Global 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 TDG Global Investment are associated (or correlated) with Damsan JSC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Damsan JSC has no effect on the direction of TDG Global i.e., TDG Global and Damsan JSC go up and down completely randomly.

Pair Corralation between TDG Global and Damsan JSC

Assuming the 90 days trading horizon TDG Global Investment is expected to generate 1.21 times more return on investment than Damsan JSC. However, TDG Global is 1.21 times more volatile than Damsan JSC. It trades about 0.11 of its potential returns per unit of risk. Damsan JSC is currently generating about 0.05 per unit of risk. If you would invest  369,000  in TDG Global Investment on December 4, 2024 and sell it today you would earn a total of  51,000  from holding TDG Global Investment or generate 13.82% return on investment over 90 days.

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

TDG Global Investment  vs.  Damsan JSC

TDG Global Investment

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TDG Global Investment are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, TDG Global displayed solid returns over the last few months and may actually be approaching a breakup point.

Damsan JSC

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Damsan JSC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Damsan JSC is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with TDG Global and Damsan JSC

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

The idea behind TDG Global Investment and Damsan 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.