Correlation Between Daou Data and KCI
Can any of the company-specific risk be diversified away by investing in both Daou Data and KCI 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 Daou Data and KCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daou Data Corp and KCI Limited, you can compare the effects of market volatilities on Daou Data and KCI 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 Daou Data with a short position of KCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daou Data and KCI.
Diversification Opportunities for Daou Data and KCI
Very weak diversification
The 3 months correlation between Daou and KCI is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Daou Data Corp and KCI Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KCI Limited and Daou Data 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 Daou Data Corp are associated (or correlated) with KCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KCI Limited has no effect on the direction of Daou Data i.e., Daou Data and KCI go up and down completely randomly.
Pair Corralation between Daou Data and KCI
Assuming the 90 days trading horizon Daou Data Corp is expected to generate 1.15 times more return on investment than KCI. However, Daou Data is 1.15 times more volatile than KCI Limited. It trades about -0.02 of its potential returns per unit of risk. KCI Limited is currently generating about -0.03 per unit of risk. If you would invest 1,155,000 in Daou Data Corp on September 3, 2024 and sell it today you would lose (74,000) from holding Daou Data Corp or give up 6.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daou Data Corp vs. KCI Limited
Performance |
| Timeline |
| Daou Data Corp |
| KCI Limited |
Daou Data and KCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daou Data and KCI
The main advantage of trading using opposite Daou Data and KCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daou Data position performs unexpectedly, KCI 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 KCI will offset losses from the drop in KCI's long position.| Daou Data vs. Dongjin Semichem Co | Daou Data vs. AhnLab Inc | Daou Data vs. Posco ICT | Daou Data vs. CJ ENM |
| KCI vs. DB Financial Investment | KCI vs. Daou Data Corp | KCI vs. Lindeman Asia Investment | KCI vs. SCI Information Service |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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