Correlation Between Daejoo Electronic and Digital Power
Can any of the company-specific risk be diversified away by investing in both Daejoo Electronic 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 Daejoo Electronic and Digital Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daejoo Electronic Materials and Digital Power Communications, you can compare the effects of market volatilities on Daejoo Electronic 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 Daejoo Electronic with a short position of Digital Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daejoo Electronic and Digital Power.
Diversification Opportunities for Daejoo Electronic and Digital Power
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Daejoo and Digital is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Daejoo Electronic Materials 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 Daejoo Electronic 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 Daejoo Electronic Materials 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 Daejoo Electronic i.e., Daejoo Electronic and Digital Power go up and down completely randomly.
Pair Corralation between Daejoo Electronic and Digital Power
Assuming the 90 days trading horizon Daejoo Electronic Materials is expected to generate 1.74 times more return on investment than Digital Power. However, Daejoo Electronic is 1.74 times more volatile than Digital Power Communications. It trades about 0.04 of its potential returns per unit of risk. Digital Power Communications is currently generating about 0.04 per unit of risk. If you would invest 7,520,000 in Daejoo Electronic Materials on August 27, 2024 and sell it today you would earn a total of 1,200,000 from holding Daejoo Electronic Materials or generate 15.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daejoo Electronic Materials vs. Digital Power Communications
Performance |
| Timeline |
| Daejoo Electronic |
| Digital Power Commun |
Daejoo Electronic and Digital Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daejoo Electronic and Digital Power
The main advantage of trading using opposite Daejoo Electronic and Digital Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daejoo Electronic 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.| Daejoo Electronic vs. Korea Real Estate | Daejoo Electronic vs. Korea Ratings Co | Daejoo Electronic vs. IQuest Co | Daejoo Electronic vs. Wonbang Tech Co |
| Digital Power vs. AptaBio Therapeutics | Digital Power vs. Daewoo SBI SPAC | Digital Power vs. Dream Security co | Digital Power vs. Microfriend |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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