Correlation Between Digital Power and Tae Kyung
Can any of the company-specific risk be diversified away by investing in both Digital Power and Tae Kyung 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 Digital Power and Tae Kyung into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Digital Power Communications and Tae Kyung Chemical, you can compare the effects of market volatilities on Digital Power and Tae Kyung 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 Digital Power with a short position of Tae Kyung. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digital Power and Tae Kyung.
Diversification Opportunities for Digital Power and Tae Kyung
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Digital and Tae is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Digital Power Communications and Tae Kyung Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tae Kyung Chemical and Digital Power 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 Digital Power Communications are associated (or correlated) with Tae Kyung. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tae Kyung Chemical has no effect on the direction of Digital Power i.e., Digital Power and Tae Kyung go up and down completely randomly.
Pair Corralation between Digital Power and Tae Kyung
Assuming the 90 days trading horizon Digital Power Communications is expected to generate 1.53 times more return on investment than Tae Kyung. However, Digital Power is 1.53 times more volatile than Tae Kyung Chemical. It trades about 0.02 of its potential returns per unit of risk. Tae Kyung Chemical is currently generating about 0.01 per unit of risk. If you would invest 796,000 in Digital Power Communications on August 29, 2024 and sell it today you would earn a total of 4,000 from holding Digital Power Communications or generate 0.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Digital Power Communications vs. Tae Kyung Chemical
Performance |
| Timeline |
| Digital Power Commun |
| Tae Kyung Chemical |
Digital Power and Tae Kyung Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digital Power and Tae Kyung
The main advantage of trading using opposite Digital Power and Tae Kyung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digital Power position performs unexpectedly, Tae Kyung 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 Tae Kyung will offset losses from the drop in Tae Kyung's long position.| Digital Power vs. National Plastic Co | Digital Power vs. LS Materials | Digital Power vs. Automobile Pc | Digital Power vs. Alton Sports CoLtd |
| Tae Kyung vs. Seoul Electronics Telecom | Tae Kyung vs. Samsung Publishing Co | Tae Kyung vs. Visang Education | Tae Kyung vs. Hannong Chemicals |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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