Correlation Between FNSTech and Digital Power
Can any of the company-specific risk be diversified away by investing in both FNSTech 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 FNSTech and Digital Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FNSTech Co and Digital Power Communications, you can compare the effects of market volatilities on FNSTech 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 FNSTech with a short position of Digital Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of FNSTech and Digital Power.
Diversification Opportunities for FNSTech and Digital Power
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FNSTech and Digital is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding FNSTech Co 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 FNSTech 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 FNSTech Co 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 FNSTech i.e., FNSTech and Digital Power go up and down completely randomly.
Pair Corralation between FNSTech and Digital Power
Assuming the 90 days trading horizon FNSTech Co is expected to generate 3.61 times more return on investment than Digital Power. However, FNSTech is 3.61 times more volatile than Digital Power Communications. It trades about 0.54 of its potential returns per unit of risk. Digital Power Communications is currently generating about -0.3 per unit of risk. If you would invest 770,000 in FNSTech Co on October 25, 2024 and sell it today you would earn a total of 368,000 from holding FNSTech Co or generate 47.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FNSTech Co vs. Digital Power Communications
Performance |
| Timeline |
| FNSTech |
| Digital Power Commun |
FNSTech and Digital Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FNSTech and Digital Power
The main advantage of trading using opposite FNSTech and Digital Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FNSTech 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.| FNSTech vs. Samsung Electronics Co | FNSTech vs. Samsung Electronics Co | FNSTech vs. LG Energy Solution | FNSTech vs. SK Hynix |
| Digital Power vs. KB Financial Group | Digital Power vs. Shinhan Financial Group | Digital Power vs. Hana Financial | Digital Power vs. Woori Financial Group |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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