Correlation Between Global Standard and DSC Investment
Can any of the company-specific risk be diversified away by investing in both Global Standard and DSC Investment 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 Global Standard and DSC Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Standard Technology and DSC Investment, you can compare the effects of market volatilities on Global Standard and DSC Investment 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 Global Standard with a short position of DSC Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Standard and DSC Investment.
Diversification Opportunities for Global Standard and DSC Investment
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Global and DSC is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Global Standard Technology and DSC Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DSC Investment and Global Standard 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 Global Standard Technology are associated (or correlated) with DSC Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DSC Investment has no effect on the direction of Global Standard i.e., Global Standard and DSC Investment go up and down completely randomly.
Pair Corralation between Global Standard and DSC Investment
Assuming the 90 days trading horizon Global Standard Technology is expected to generate 2.09 times more return on investment than DSC Investment. However, Global Standard is 2.09 times more volatile than DSC Investment. It trades about 0.06 of its potential returns per unit of risk. DSC Investment is currently generating about -0.03 per unit of risk. If you would invest 1,526,000 in Global Standard Technology on August 28, 2024 and sell it today you would earn a total of 46,000 from holding Global Standard Technology or generate 3.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Standard Technology vs. DSC Investment
Performance |
| Timeline |
| Global Standard Tech |
| DSC Investment |
Global Standard and DSC Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Standard and DSC Investment
The main advantage of trading using opposite Global Standard and DSC Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Standard position performs unexpectedly, DSC Investment 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 DSC Investment will offset losses from the drop in DSC Investment's long position.| Global Standard vs. Korea Real Estate | Global Standard vs. Korea Ratings Co | Global Standard vs. IQuest Co | Global Standard vs. Wonbang Tech 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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