Correlation Between Digital Power and ENERGYMACHINERY KOREA
Can any of the company-specific risk be diversified away by investing in both Digital Power and ENERGYMACHINERY KOREA 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 ENERGYMACHINERY KOREA 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 ENERGYMACHINERY KOREA CoLtd, you can compare the effects of market volatilities on Digital Power and ENERGYMACHINERY KOREA 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 ENERGYMACHINERY KOREA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digital Power and ENERGYMACHINERY KOREA.
Diversification Opportunities for Digital Power and ENERGYMACHINERY KOREA
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Digital and ENERGYMACHINERY is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Digital Power Communications and ENERGYMACHINERY KOREA CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENERGYMACHINERY KOREA 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 ENERGYMACHINERY KOREA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENERGYMACHINERY KOREA has no effect on the direction of Digital Power i.e., Digital Power and ENERGYMACHINERY KOREA go up and down completely randomly.
Pair Corralation between Digital Power and ENERGYMACHINERY KOREA
Assuming the 90 days trading horizon Digital Power is expected to generate 4.62 times less return on investment than ENERGYMACHINERY KOREA. But when comparing it to its historical volatility, Digital Power Communications is 1.6 times less risky than ENERGYMACHINERY KOREA. It trades about 0.25 of its potential returns per unit of risk. ENERGYMACHINERY KOREA CoLtd is currently generating about 0.72 of returns per unit of risk over similar time horizon. If you would invest 158,700 in ENERGYMACHINERY KOREA CoLtd on October 9, 2024 and sell it today you would earn a total of 71,800 from holding ENERGYMACHINERY KOREA CoLtd or generate 45.24% 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. ENERGYMACHINERY KOREA CoLtd
Performance |
| Timeline |
| Digital Power Commun |
| ENERGYMACHINERY KOREA |
Digital Power and ENERGYMACHINERY KOREA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digital Power and ENERGYMACHINERY KOREA
The main advantage of trading using opposite Digital Power and ENERGYMACHINERY KOREA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digital Power position performs unexpectedly, ENERGYMACHINERY KOREA 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 ENERGYMACHINERY KOREA will offset losses from the drop in ENERGYMACHINERY KOREA's long position.| Digital Power vs. Orbitech Co | Digital Power vs. FNSTech Co | Digital Power vs. Yura Tech Co | Digital Power vs. SCI Information Service |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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