Correlation Between Digital Power and Choil Aluminum
Can any of the company-specific risk be diversified away by investing in both Digital Power and Choil Aluminum 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 Choil Aluminum 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 Choil Aluminum, you can compare the effects of market volatilities on Digital Power and Choil Aluminum 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 Choil Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digital Power and Choil Aluminum.
Diversification Opportunities for Digital Power and Choil Aluminum
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Digital and Choil is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Digital Power Communications and Choil Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Choil Aluminum 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 Choil Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Choil Aluminum has no effect on the direction of Digital Power i.e., Digital Power and Choil Aluminum go up and down completely randomly.
Pair Corralation between Digital Power and Choil Aluminum
Assuming the 90 days trading horizon Digital Power Communications is expected to under-perform the Choil Aluminum. But the stock apears to be less risky and, when comparing its historical volatility, Digital Power Communications is 1.05 times less risky than Choil Aluminum. The stock trades about -0.3 of its potential returns per unit of risk. The Choil Aluminum is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 143,000 in Choil Aluminum on October 25, 2024 and sell it today you would earn a total of 9,700 from holding Choil Aluminum or generate 6.78% 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. Choil Aluminum
Performance |
| Timeline |
| Digital Power Commun |
| Choil Aluminum |
Digital Power and Choil Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digital Power and Choil Aluminum
The main advantage of trading using opposite Digital Power and Choil Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digital Power position performs unexpectedly, Choil Aluminum 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 Choil Aluminum will offset losses from the drop in Choil Aluminum's 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 |
| Choil Aluminum vs. NewFlex Technology Co | Choil Aluminum vs. Kbi Metal Co | Choil Aluminum vs. Youngsin Metal Industrial | Choil Aluminum vs. Dongil Metal Co |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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