Correlation Between Digital Power and Iljin Display
Can any of the company-specific risk be diversified away by investing in both Digital Power and Iljin Display 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 Iljin Display 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 Iljin Display, you can compare the effects of market volatilities on Digital Power and Iljin Display 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 Iljin Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digital Power and Iljin Display.
Diversification Opportunities for Digital Power and Iljin Display
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Digital and Iljin is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Digital Power Communications and Iljin Display in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iljin Display 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 Iljin Display. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iljin Display has no effect on the direction of Digital Power i.e., Digital Power and Iljin Display go up and down completely randomly.
Pair Corralation between Digital Power and Iljin Display
Assuming the 90 days trading horizon Digital Power Communications is expected to under-perform the Iljin Display. But the stock apears to be less risky and, when comparing its historical volatility, Digital Power Communications is 1.71 times less risky than Iljin Display. The stock trades about -0.16 of its potential returns per unit of risk. The Iljin Display is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 82,000 in Iljin Display on November 3, 2024 and sell it today you would earn a total of 6,300 from holding Iljin Display or generate 7.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Digital Power Communications vs. Iljin Display
Performance |
| Timeline |
| Digital Power Commun |
| Iljin Display |
Digital Power and Iljin Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digital Power and Iljin Display
The main advantage of trading using opposite Digital Power and Iljin Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digital Power position performs unexpectedly, Iljin Display 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 Iljin Display will offset losses from the drop in Iljin Display's long position.| Digital Power vs. KT Submarine Telecom | Digital Power vs. Aprogen Healthcare Games | Digital Power vs. InnoTherapy | Digital Power vs. Seoul Electronics Telecom |
| Iljin Display vs. Korean Air Lines | Iljin Display vs. Nice Information Telecommunication | Iljin Display vs. Dongbu Insurance Co | Iljin Display 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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