Correlation Between Digital Power and Korea Ratings
Can any of the company-specific risk be diversified away by investing in both Digital Power and Korea Ratings 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 Korea Ratings 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 Korea Ratings Co, you can compare the effects of market volatilities on Digital Power and Korea Ratings 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 Korea Ratings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digital Power and Korea Ratings.
Diversification Opportunities for Digital Power and Korea Ratings
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Digital and Korea is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Digital Power Communications and Korea Ratings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Ratings 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 Korea Ratings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Ratings has no effect on the direction of Digital Power i.e., Digital Power and Korea Ratings go up and down completely randomly.
Pair Corralation between Digital Power and Korea Ratings
Assuming the 90 days trading horizon Digital Power Communications is expected to generate 3.24 times more return on investment than Korea Ratings. However, Digital Power is 3.24 times more volatile than Korea Ratings Co. It trades about 0.14 of its potential returns per unit of risk. Korea Ratings Co is currently generating about 0.25 per unit of risk. If you would invest 809,000 in Digital Power Communications on September 3, 2024 and sell it today you would earn a total of 53,000 from holding Digital Power Communications or generate 6.55% 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. Korea Ratings Co
Performance |
| Timeline |
| Digital Power Commun |
| Korea Ratings |
Digital Power and Korea Ratings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digital Power and Korea Ratings
The main advantage of trading using opposite Digital Power and Korea Ratings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digital Power position performs unexpectedly, Korea Ratings 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 Korea Ratings will offset losses from the drop in Korea Ratings' long position.| Digital Power vs. Daol Investment Securities | Digital Power vs. Stic Investments | Digital Power vs. DB Financial Investment | Digital Power vs. Kbi Metal Co |
| Korea Ratings vs. Ilji Technology Co | Korea Ratings vs. LG Electronics Pfd | Korea Ratings vs. Korean Air Lines | Korea Ratings vs. KyungIn Electronics 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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