Correlation Between Digital Imaging and Daou Technology
Can any of the company-specific risk be diversified away by investing in both Digital Imaging and Daou Technology 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 Digital Imaging and Daou Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Digital Imaging Technology and Daou Technology, you can compare the effects of market volatilities on Digital Imaging and Daou Technology 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 Digital Imaging with a short position of Daou Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digital Imaging and Daou Technology.
Diversification Opportunities for Digital Imaging and Daou Technology
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Digital and Daou is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Digital Imaging Technology and Daou Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daou Technology and Digital Imaging 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 Digital Imaging Technology are associated (or correlated) with Daou Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daou Technology has no effect on the direction of Digital Imaging i.e., Digital Imaging and Daou Technology go up and down completely randomly.
Pair Corralation between Digital Imaging and Daou Technology
Assuming the 90 days trading horizon Digital Imaging Technology is expected to generate 2.78 times more return on investment than Daou Technology. However, Digital Imaging is 2.78 times more volatile than Daou Technology. It trades about 0.21 of its potential returns per unit of risk. Daou Technology is currently generating about -0.05 per unit of risk. If you would invest 1,085,000 in Digital Imaging Technology on September 24, 2024 and sell it today you would earn a total of 222,000 from holding Digital Imaging Technology or generate 20.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Digital Imaging Technology vs. Daou Technology
Performance |
| Timeline |
| Digital Imaging Tech |
| Daou Technology |
Digital Imaging and Daou Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digital Imaging and Daou Technology
The main advantage of trading using opposite Digital Imaging and Daou Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digital Imaging position performs unexpectedly, Daou Technology 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 Daou Technology will offset losses from the drop in Daou Technology's long position.| Digital Imaging vs. MetaLabs Co | Digital Imaging vs. Taegu Broadcasting | Digital Imaging vs. Korea Computer | Digital Imaging vs. Jeong Moon Information |
| Daou Technology vs. AptaBio Therapeutics | Daou Technology vs. Wonbang Tech Co | Daou Technology vs. Busan Industrial Co | Daou Technology vs. Busan Ind |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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