Correlation Between Digital Power and Sam A
Can any of the company-specific risk be diversified away by investing in both Digital Power and Sam A 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 Sam A 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 Sam A Pharm Co, you can compare the effects of market volatilities on Digital Power and Sam A 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 Sam A. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digital Power and Sam A.
Diversification Opportunities for Digital Power and Sam A
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Digital and Sam is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Digital Power Communications and Sam A Pharm Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sam A Pharm 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 Sam A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sam A Pharm has no effect on the direction of Digital Power i.e., Digital Power and Sam A go up and down completely randomly.
Pair Corralation between Digital Power and Sam A
Assuming the 90 days trading horizon Digital Power Communications is expected to generate 0.96 times more return on investment than Sam A. However, Digital Power Communications is 1.04 times less risky than Sam A. It trades about -0.02 of its potential returns per unit of risk. Sam A Pharm Co is currently generating about -0.15 per unit of risk. If you would invest 901,991 in Digital Power Communications on November 3, 2024 and sell it today you would lose (64,991) from holding Digital Power Communications or give up 7.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Digital Power Communications vs. Sam A Pharm Co
Performance |
| Timeline |
| Digital Power Commun |
| Sam A Pharm |
Digital Power and Sam A Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digital Power and Sam A
The main advantage of trading using opposite Digital Power and Sam A positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digital Power position performs unexpectedly, Sam A 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 Sam A will offset losses from the drop in Sam A's long position.| Digital Power vs. Ssangyong Information Communication | Digital Power vs. Lotte Data Communication | Digital Power vs. Orbitech Co | Digital Power vs. Sangsin Energy Display |
| Sam A vs. Kolon Life Science | Sam A vs. JETEMA Co | Sam A vs. Aminologics CoLtd | Sam A vs. Daihan Pharmaceutical CoLtd |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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