Correlation Between Insung Information and Digital Multimedia
Can any of the company-specific risk be diversified away by investing in both Insung Information and Digital Multimedia 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 Insung Information and Digital Multimedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Insung Information Co and Digital Multimedia Technology, you can compare the effects of market volatilities on Insung Information and Digital Multimedia 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 Insung Information with a short position of Digital Multimedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insung Information and Digital Multimedia.
Diversification Opportunities for Insung Information and Digital Multimedia
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Insung and Digital is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Insung Information Co and Digital Multimedia Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital Multimedia and Insung Information 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 Insung Information Co are associated (or correlated) with Digital Multimedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital Multimedia has no effect on the direction of Insung Information i.e., Insung Information and Digital Multimedia go up and down completely randomly.
Pair Corralation between Insung Information and Digital Multimedia
Assuming the 90 days trading horizon Insung Information Co is expected to generate 0.88 times more return on investment than Digital Multimedia. However, Insung Information Co is 1.14 times less risky than Digital Multimedia. It trades about -0.16 of its potential returns per unit of risk. Digital Multimedia Technology is currently generating about -0.26 per unit of risk. If you would invest 213,500 in Insung Information Co on August 31, 2024 and sell it today you would lose (18,700) from holding Insung Information Co or give up 8.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Insung Information Co vs. Digital Multimedia Technology
Performance |
| Timeline |
| Insung Information |
| Digital Multimedia |
Insung Information and Digital Multimedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insung Information and Digital Multimedia
The main advantage of trading using opposite Insung Information and Digital Multimedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insung Information position performs unexpectedly, Digital Multimedia 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 Digital Multimedia will offset losses from the drop in Digital Multimedia's long position.| Insung Information vs. Dongsin Engineering Construction | Insung Information vs. Doosan Fuel Cell | Insung Information vs. Daishin Balance 1 | Insung Information vs. Total Soft Bank |
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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