Correlation Between Digital Power and SungMoon Electronics
Can any of the company-specific risk be diversified away by investing in both Digital Power and SungMoon 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 SungMoon 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 SungMoon Electronics Co, you can compare the effects of market volatilities on Digital Power and SungMoon 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 SungMoon Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digital Power and SungMoon Electronics.
Diversification Opportunities for Digital Power and SungMoon Electronics
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Digital and SungMoon is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Digital Power Communications and SungMoon Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SungMoon 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 SungMoon Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SungMoon Electronics has no effect on the direction of Digital Power i.e., Digital Power and SungMoon Electronics go up and down completely randomly.
Pair Corralation between Digital Power and SungMoon Electronics
Assuming the 90 days trading horizon Digital Power Communications is expected to under-perform the SungMoon Electronics. But the stock apears to be less risky and, when comparing its historical volatility, Digital Power Communications is 1.32 times less risky than SungMoon Electronics. The stock trades about -0.11 of its potential returns per unit of risk. The SungMoon Electronics Co is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 111,200 in SungMoon Electronics Co on October 17, 2024 and sell it today you would earn a total of 4,300 from holding SungMoon Electronics Co or generate 3.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Digital Power Communications vs. SungMoon Electronics Co
Performance |
| Timeline |
| Digital Power Commun |
| SungMoon Electronics |
Digital Power and SungMoon Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digital Power and SungMoon Electronics
The main advantage of trading using opposite Digital Power and SungMoon Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digital Power position performs unexpectedly, SungMoon 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 SungMoon Electronics will offset losses from the drop in SungMoon Electronics' long position.| Digital Power vs. Polaris Office Corp | Digital Power vs. Ecoplastic | Digital Power vs. Kukdong Oil Chemicals | Digital Power vs. Lake Materials Co |
| SungMoon Electronics vs. FoodNamoo | SungMoon Electronics vs. Kisan Telecom Co | SungMoon Electronics vs. Digital Power Communications | SungMoon Electronics vs. Lotte Data Communication |
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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