Correlation Between Digital Power and KyungIn Electronics
Can any of the company-specific risk be diversified away by investing in both Digital Power and KyungIn 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 KyungIn 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 KyungIn Electronics Co, you can compare the effects of market volatilities on Digital Power and KyungIn 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 KyungIn Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digital Power and KyungIn Electronics.
Diversification Opportunities for Digital Power and KyungIn Electronics
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Digital and KyungIn is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Digital Power Communications and KyungIn Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KyungIn 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 KyungIn Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KyungIn Electronics has no effect on the direction of Digital Power i.e., Digital Power and KyungIn Electronics go up and down completely randomly.
Pair Corralation between Digital Power and KyungIn Electronics
Assuming the 90 days trading horizon Digital Power Communications is expected to generate 0.82 times more return on investment than KyungIn Electronics. However, Digital Power Communications is 1.23 times less risky than KyungIn Electronics. It trades about 0.1 of its potential returns per unit of risk. KyungIn Electronics Co is currently generating about -0.07 per unit of risk. If you would invest 761,055 in Digital Power Communications on October 26, 2024 and sell it today you would earn a total of 53,945 from holding Digital Power Communications or generate 7.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Digital Power Communications vs. KyungIn Electronics Co
Performance |
| Timeline |
| Digital Power Commun |
| KyungIn Electronics |
Digital Power and KyungIn Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digital Power and KyungIn Electronics
The main advantage of trading using opposite Digital Power and KyungIn Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digital Power position performs unexpectedly, KyungIn 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 KyungIn Electronics will offset losses from the drop in KyungIn Electronics' long position.| Digital Power vs. KB Financial Group | Digital Power vs. Shinhan Financial Group | Digital Power vs. Hana Financial | Digital Power vs. Woori Financial Group |
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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 Valuation module to check real value of public entities based on technical and fundamental data.
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