Correlation Between Digital Power and Anam Electronics
Can any of the company-specific risk be diversified away by investing in both Digital Power and Anam Electronics 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 Anam Electronics 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 Anam Electronics Co, you can compare the effects of market volatilities on Digital Power and Anam Electronics 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 Anam Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digital Power and Anam Electronics.
Diversification Opportunities for Digital Power and Anam Electronics
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Digital and Anam is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Digital Power Communications and Anam Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anam Electronics 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 Anam Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anam Electronics has no effect on the direction of Digital Power i.e., Digital Power and Anam Electronics go up and down completely randomly.
Pair Corralation between Digital Power and Anam Electronics
Assuming the 90 days trading horizon Digital Power is expected to generate 6.26 times less return on investment than Anam Electronics. But when comparing it to its historical volatility, Digital Power Communications is 1.53 times less risky than Anam Electronics. It trades about 0.03 of its potential returns per unit of risk. Anam Electronics Co is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 127,500 in Anam Electronics Co on October 14, 2024 and sell it today you would earn a total of 6,200 from holding Anam Electronics Co or generate 4.86% 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. Anam Electronics Co
Performance |
| Timeline |
| Digital Power Commun |
| Anam Electronics |
Digital Power and Anam Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digital Power and Anam Electronics
The main advantage of trading using opposite Digital Power and Anam Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digital Power position performs unexpectedly, Anam Electronics 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 Anam Electronics will offset losses from the drop in Anam Electronics' long position.| Digital Power vs. Daou Data Corp | Digital Power vs. Songwon Industrial Co | Digital Power vs. PJ Metal Co | Digital Power vs. Industrial Bank |
| Anam Electronics vs. Digital Power Communications | Anam Electronics vs. Lotte Data Communication | Anam Electronics vs. Daol Investment Securities | Anam Electronics vs. Daishin Information Communications |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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