Correlation Between Digital Power and Daewoo SBI
Can any of the company-specific risk be diversified away by investing in both Digital Power and Daewoo SBI 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 Daewoo SBI 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 Daewoo SBI SPAC, you can compare the effects of market volatilities on Digital Power and Daewoo SBI 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 Daewoo SBI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digital Power and Daewoo SBI.
Diversification Opportunities for Digital Power and Daewoo SBI
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Digital and Daewoo is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Digital Power Communications and Daewoo SBI SPAC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daewoo SBI SPAC 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 Daewoo SBI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daewoo SBI SPAC has no effect on the direction of Digital Power i.e., Digital Power and Daewoo SBI go up and down completely randomly.
Pair Corralation between Digital Power and Daewoo SBI
Assuming the 90 days trading horizon Digital Power Communications is expected to generate 1.06 times more return on investment than Daewoo SBI. However, Digital Power is 1.06 times more volatile than Daewoo SBI SPAC. It trades about 0.02 of its potential returns per unit of risk. Daewoo SBI SPAC is currently generating about -0.26 per unit of risk. If you would invest 796,000 in Digital Power Communications on August 29, 2024 and sell it today you would earn a total of 4,000 from holding Digital Power Communications or generate 0.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Digital Power Communications vs. Daewoo SBI SPAC
Performance |
| Timeline |
| Digital Power Commun |
| Daewoo SBI SPAC |
Digital Power and Daewoo SBI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digital Power and Daewoo SBI
The main advantage of trading using opposite Digital Power and Daewoo SBI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digital Power position performs unexpectedly, Daewoo SBI 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 Daewoo SBI will offset losses from the drop in Daewoo SBI's long position.| Digital Power vs. FNC Entertainment Co | Digital Power vs. Echomarketing CoLtd | Digital Power vs. GS Retail Co | Digital Power vs. Nasmedia Co |
| Daewoo SBI vs. CU Medical Systems | Daewoo SBI vs. Sejong Telecom | Daewoo SBI vs. Digital Power Communications | Daewoo SBI vs. Lotte Non Life Insurance |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Commodity Directory Find actively traded commodities issued by global exchanges |