Correlation Between Homecast CoLtd and DIGITAL CHOSUN
Can any of the company-specific risk be diversified away by investing in both Homecast CoLtd and DIGITAL CHOSUN 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 Homecast CoLtd and DIGITAL CHOSUN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Homecast CoLtd and DIGITAL CHOSUN, you can compare the effects of market volatilities on Homecast CoLtd and DIGITAL CHOSUN 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 Homecast CoLtd with a short position of DIGITAL CHOSUN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Homecast CoLtd and DIGITAL CHOSUN.
Diversification Opportunities for Homecast CoLtd and DIGITAL CHOSUN
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Homecast and DIGITAL is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Homecast CoLtd and DIGITAL CHOSUN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DIGITAL CHOSUN and Homecast CoLtd 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 Homecast CoLtd are associated (or correlated) with DIGITAL CHOSUN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DIGITAL CHOSUN has no effect on the direction of Homecast CoLtd i.e., Homecast CoLtd and DIGITAL CHOSUN go up and down completely randomly.
Pair Corralation between Homecast CoLtd and DIGITAL CHOSUN
Assuming the 90 days trading horizon Homecast CoLtd is expected to under-perform the DIGITAL CHOSUN. But the stock apears to be less risky and, when comparing its historical volatility, Homecast CoLtd is 1.49 times less risky than DIGITAL CHOSUN. The stock trades about -0.15 of its potential returns per unit of risk. The DIGITAL CHOSUN is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 159,275 in DIGITAL CHOSUN on October 15, 2024 and sell it today you would earn a total of 8,525 from holding DIGITAL CHOSUN or generate 5.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Homecast CoLtd vs. DIGITAL CHOSUN
Performance |
| Timeline |
| Homecast CoLtd |
| DIGITAL CHOSUN |
Homecast CoLtd and DIGITAL CHOSUN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Homecast CoLtd and DIGITAL CHOSUN
The main advantage of trading using opposite Homecast CoLtd and DIGITAL CHOSUN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Homecast CoLtd position performs unexpectedly, DIGITAL CHOSUN 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 CHOSUN will offset losses from the drop in DIGITAL CHOSUN's long position.| Homecast CoLtd vs. Duksan Hi Metal | Homecast CoLtd vs. Formetal Co | Homecast CoLtd vs. Daiyang Metal Co | Homecast CoLtd vs. Daejung Chemicals Metals |
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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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