Correlation Between Sang A and Digital Power
Can any of the company-specific risk be diversified away by investing in both Sang A 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 Sang A and Digital Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sang A Frontec CoLtd and Digital Power Communications, you can compare the effects of market volatilities on Sang A 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 Sang A with a short position of Digital Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sang A and Digital Power.
Diversification Opportunities for Sang A and Digital Power
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sang and Digital is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Sang A Frontec CoLtd 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 Sang A 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 Sang A Frontec CoLtd 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 Sang A i.e., Sang A and Digital Power go up and down completely randomly.
Pair Corralation between Sang A and Digital Power
Assuming the 90 days trading horizon Sang A Frontec CoLtd is expected to under-perform the Digital Power. In addition to that, Sang A is 1.13 times more volatile than Digital Power Communications. It trades about -0.03 of its total potential returns per unit of risk. Digital Power Communications is currently generating about 0.05 per unit of volatility. If you would invest 564,525 in Digital Power Communications on October 13, 2024 and sell it today you would earn a total of 289,475 from holding Digital Power Communications or generate 51.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sang A Frontec CoLtd vs. Digital Power Communications
Performance |
| Timeline |
| Sang A Frontec |
| Digital Power Commun |
Sang A and Digital Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sang A and Digital Power
The main advantage of trading using opposite Sang A and Digital Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sang A 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.| Sang A vs. MediaZen | Sang A vs. Pan Entertainment Co | Sang A vs. SAMG Entertainment Co | Sang A vs. Lotte Data Communication |
| Digital Power vs. Display Tech Co | Digital Power vs. LG Display Co | Digital Power vs. Grand Korea Leisure | Digital Power vs. GS Retail 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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