Correlation Between Ecoplastic and Digital Power
Can any of the company-specific risk be diversified away by investing in both Ecoplastic and Digital Power 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 Ecoplastic and Digital Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ecoplastic and Digital Power Communications, you can compare the effects of market volatilities on Ecoplastic and Digital Power 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 Ecoplastic with a short position of Digital Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecoplastic and Digital Power.
Diversification Opportunities for Ecoplastic and Digital Power
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ecoplastic and Digital is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Ecoplastic and Digital Power Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital Power Commun and Ecoplastic 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 Ecoplastic are associated (or correlated) with Digital Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital Power Commun has no effect on the direction of Ecoplastic i.e., Ecoplastic and Digital Power go up and down completely randomly.
Pair Corralation between Ecoplastic and Digital Power
Assuming the 90 days trading horizon Ecoplastic is expected to under-perform the Digital Power. In addition to that, Ecoplastic is 1.25 times more volatile than Digital Power Communications. It trades about -0.07 of its total potential returns per unit of risk. Digital Power Communications is currently generating about 0.06 per unit of volatility. If you would invest 765,915 in Digital Power Communications on October 18, 2024 and sell it today you would earn a total of 65,085 from holding Digital Power Communications or generate 8.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ecoplastic vs. Digital Power Communications
Performance |
| Timeline |
| Ecoplastic |
| Digital Power Commun |
Ecoplastic and Digital Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecoplastic and Digital Power
The main advantage of trading using opposite Ecoplastic and Digital Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecoplastic position performs unexpectedly, Digital Power 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 Power will offset losses from the drop in Digital Power's long position.| Ecoplastic vs. KG Eco Technology | Ecoplastic vs. Global Standard Technology | Ecoplastic vs. Hanjoo Light Metal | Ecoplastic vs. Kukil Metal Co |
| Digital Power vs. Polaris Office Corp | Digital Power vs. Ecoplastic | Digital Power vs. Kukdong Oil Chemicals | Digital Power vs. Lake Materials Co |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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