Correlation Between Digital Power and IC Technology
Can any of the company-specific risk be diversified away by investing in both Digital Power and IC Technology 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 IC Technology 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 IC Technology Co, you can compare the effects of market volatilities on Digital Power and IC Technology 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 IC Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digital Power and IC Technology.
Diversification Opportunities for Digital Power and IC Technology
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Digital and 052860 is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Digital Power Communications and IC Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IC Technology 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 IC Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IC Technology has no effect on the direction of Digital Power i.e., Digital Power and IC Technology go up and down completely randomly.
Pair Corralation between Digital Power and IC Technology
Assuming the 90 days trading horizon Digital Power Communications is expected to generate 0.56 times more return on investment than IC Technology. However, Digital Power Communications is 1.78 times less risky than IC Technology. It trades about 0.06 of its potential returns per unit of risk. IC Technology Co is currently generating about -0.01 per unit of risk. If you would invest 676,394 in Digital Power Communications on September 14, 2024 and sell it today you would earn a total of 186,606 from holding Digital Power Communications or generate 27.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.59% |
| Values | Daily Returns |
Digital Power Communications vs. IC Technology Co
Performance |
| Timeline |
| Digital Power Commun |
| IC Technology |
Digital Power and IC Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digital Power and IC Technology
The main advantage of trading using opposite Digital Power and IC Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digital Power position performs unexpectedly, IC Technology 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 IC Technology will offset losses from the drop in IC Technology's long position.| Digital Power vs. Samsung Electronics Co | Digital Power vs. Samsung Electronics Co | Digital Power vs. SK Hynix | Digital Power vs. POSCO Holdings |
| IC Technology vs. Innowireless Co | IC Technology vs. KT Submarine Telecom | IC Technology vs. Netmarble Games Corp | IC Technology vs. Mgame Corp |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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