Correlation Between Digital Power and Cube Entertainment
Can any of the company-specific risk be diversified away by investing in both Digital Power and Cube Entertainment 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 Cube Entertainment 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 Cube Entertainment, you can compare the effects of market volatilities on Digital Power and Cube Entertainment 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 Cube Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digital Power and Cube Entertainment.
Diversification Opportunities for Digital Power and Cube Entertainment
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Digital and Cube is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Digital Power Communications and Cube Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cube Entertainment 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 Cube Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cube Entertainment has no effect on the direction of Digital Power i.e., Digital Power and Cube Entertainment go up and down completely randomly.
Pair Corralation between Digital Power and Cube Entertainment
Assuming the 90 days trading horizon Digital Power Communications is expected to generate 0.66 times more return on investment than Cube Entertainment. However, Digital Power Communications is 1.5 times less risky than Cube Entertainment. It trades about 0.06 of its potential returns per unit of risk. Cube Entertainment is currently generating about 0.02 per unit of risk. If you would invest 500,493 in Digital Power Communications on September 21, 2024 and sell it today you would earn a total of 349,507 from holding Digital Power Communications or generate 69.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Digital Power Communications vs. Cube Entertainment
Performance |
| Timeline |
| Digital Power Commun |
| Cube Entertainment |
Digital Power and Cube Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digital Power and Cube Entertainment
The main advantage of trading using opposite Digital Power and Cube Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digital Power position performs unexpectedly, Cube Entertainment 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 Cube Entertainment will offset losses from the drop in Cube Entertainment'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 |
| Cube Entertainment vs. Taegu Broadcasting | Cube Entertainment vs. Iljin Display | Cube Entertainment vs. Daishin Information Communications | Cube Entertainment vs. Digital Power 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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