Correlation Between Digital Power and Genic
Can any of the company-specific risk be diversified away by investing in both Digital Power and Genic 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 Genic 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 Genic Co, you can compare the effects of market volatilities on Digital Power and Genic 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 Genic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digital Power and Genic.
Diversification Opportunities for Digital Power and Genic
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Digital and Genic is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Digital Power Communications and Genic Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genic 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 Genic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genic has no effect on the direction of Digital Power i.e., Digital Power and Genic go up and down completely randomly.
Pair Corralation between Digital Power and Genic
Assuming the 90 days trading horizon Digital Power Communications is expected to under-perform the Genic. But the stock apears to be less risky and, when comparing its historical volatility, Digital Power Communications is 1.54 times less risky than Genic. The stock trades about -0.38 of its potential returns per unit of risk. The Genic Co is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 2,175,000 in Genic Co on December 8, 2024 and sell it today you would earn a total of 220,000 from holding Genic Co or generate 10.11% 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. Genic Co
Performance |
| Timeline |
| Digital Power Commun |
| Genic |
Digital Power and Genic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digital Power and Genic
The main advantage of trading using opposite Digital Power and Genic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digital Power position performs unexpectedly, Genic 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 Genic will offset losses from the drop in Genic's long position.| Digital Power vs. Kisan Telecom Co | Digital Power vs. Nice Information Telecommunication | Digital Power vs. Hyundai Engineering Construction | Digital Power vs. GS Engineering Construction |
| Genic vs. Jinro Distillers Co | Genic vs. AeroSpace Technology of | Genic vs. Next Entertainment World | Genic vs. TJ media 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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