Correlation Between Digital Power and Air Busan
Can any of the company-specific risk be diversified away by investing in both Digital Power and Air Busan 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 Air Busan 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 Air Busan Co, you can compare the effects of market volatilities on Digital Power and Air Busan 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 Air Busan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digital Power and Air Busan.
Diversification Opportunities for Digital Power and Air Busan
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Digital and Air is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Digital Power Communications and Air Busan Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Busan 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 Air Busan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Busan has no effect on the direction of Digital Power i.e., Digital Power and Air Busan go up and down completely randomly.
Pair Corralation between Digital Power and Air Busan
Assuming the 90 days trading horizon Digital Power Communications is expected to generate 1.26 times more return on investment than Air Busan. However, Digital Power is 1.26 times more volatile than Air Busan Co. It trades about 0.03 of its potential returns per unit of risk. Air Busan Co is currently generating about -0.16 per unit of risk. If you would invest 848,533 in Digital Power Communications on October 14, 2024 and sell it today you would earn a total of 5,467 from holding Digital Power Communications or generate 0.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Digital Power Communications vs. Air Busan Co
Performance |
| Timeline |
| Digital Power Commun |
| Air Busan |
Digital Power and Air Busan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digital Power and Air Busan
The main advantage of trading using opposite Digital Power and Air Busan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digital Power position performs unexpectedly, Air Busan 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 Air Busan will offset losses from the drop in Air Busan's long position.| Digital Power vs. Daou Data Corp | Digital Power vs. Songwon Industrial Co | Digital Power vs. PJ Metal Co | Digital Power vs. Industrial Bank |
| Air Busan vs. Worldex Industry Trading | Air Busan vs. DB Financial Investment | Air Busan vs. Korean Drug Co | Air Busan vs. Golden Bridge Investment |
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 Stocks Directory module to find actively traded stocks across global markets.
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