Correlation Between Daou Technology and RFTech
Can any of the company-specific risk be diversified away by investing in both Daou Technology and RFTech 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 Daou Technology and RFTech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daou Technology and RFTech Co, you can compare the effects of market volatilities on Daou Technology and RFTech 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 Daou Technology with a short position of RFTech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daou Technology and RFTech.
Diversification Opportunities for Daou Technology and RFTech
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Daou and RFTech is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Daou Technology and RFTech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RFTech and Daou Technology 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 Daou Technology are associated (or correlated) with RFTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RFTech has no effect on the direction of Daou Technology i.e., Daou Technology and RFTech go up and down completely randomly.
Pair Corralation between Daou Technology and RFTech
Assuming the 90 days trading horizon Daou Technology is expected to under-perform the RFTech. But the stock apears to be less risky and, when comparing its historical volatility, Daou Technology is 2.53 times less risky than RFTech. The stock trades about -0.03 of its potential returns per unit of risk. The RFTech Co is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 301,500 in RFTech Co on September 1, 2024 and sell it today you would earn a total of 41,500 from holding RFTech Co or generate 13.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daou Technology vs. RFTech Co
Performance |
| Timeline |
| Daou Technology |
| RFTech |
Daou Technology and RFTech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daou Technology and RFTech
The main advantage of trading using opposite Daou Technology and RFTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daou Technology position performs unexpectedly, RFTech 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 RFTech will offset losses from the drop in RFTech's long position.| Daou Technology vs. Kaonmedia Co | Daou Technology vs. JYP Entertainment Corp | Daou Technology vs. DC Media Co | Daou Technology vs. Raontech |
| RFTech vs. Kukil Metal Co | RFTech vs. Osang Healthcare Co,Ltd | RFTech vs. CKH Food Health | RFTech vs. Infinitt Healthcare Co |
Check out your portfolio center.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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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