Correlation Between Digital Imaging and Naver
Can any of the company-specific risk be diversified away by investing in both Digital Imaging and Naver 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 Naver 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 Naver, you can compare the effects of market volatilities on Digital Imaging and Naver 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 Naver. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digital Imaging and Naver.
Diversification Opportunities for Digital Imaging and Naver
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Digital and Naver is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Digital Imaging Technology and Naver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naver 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 Naver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naver has no effect on the direction of Digital Imaging i.e., Digital Imaging and Naver go up and down completely randomly.
Pair Corralation between Digital Imaging and Naver
Assuming the 90 days trading horizon Digital Imaging Technology is expected to generate 1.4 times more return on investment than Naver. However, Digital Imaging is 1.4 times more volatile than Naver. It trades about 0.28 of its potential returns per unit of risk. Naver is currently generating about -0.08 per unit of risk. If you would invest 1,275,000 in Digital Imaging Technology on October 17, 2024 and sell it today you would earn a total of 205,000 from holding Digital Imaging Technology or generate 16.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Digital Imaging Technology vs. Naver
Performance |
| Timeline |
| Digital Imaging Tech |
| Naver |
Digital Imaging and Naver Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digital Imaging and Naver
The main advantage of trading using opposite Digital Imaging and Naver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digital Imaging position performs unexpectedly, Naver 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 Naver will offset losses from the drop in Naver's long position.| Digital Imaging vs. PLAYWITH | Digital Imaging vs. WONIK Materials CoLtd | Digital Imaging vs. Iljin Display | Digital Imaging vs. Genie Music |
| Naver vs. KG Eco Technology | Naver vs. Digital Imaging Technology | Naver vs. BIT Computer Co | Naver vs. iNtRON Biotechnology |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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