Correlation Between Digital Imaging and NewFlex Technology
Can any of the company-specific risk be diversified away by investing in both Digital Imaging and NewFlex 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 NewFlex 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 NewFlex Technology Co, you can compare the effects of market volatilities on Digital Imaging and NewFlex 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 NewFlex Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digital Imaging and NewFlex Technology.
Diversification Opportunities for Digital Imaging and NewFlex Technology
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Digital and NewFlex is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Digital Imaging Technology and NewFlex Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NewFlex 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 NewFlex Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NewFlex Technology has no effect on the direction of Digital Imaging i.e., Digital Imaging and NewFlex Technology go up and down completely randomly.
Pair Corralation between Digital Imaging and NewFlex Technology
Assuming the 90 days trading horizon Digital Imaging Technology is expected to generate 1.11 times more return on investment than NewFlex Technology. However, Digital Imaging is 1.11 times more volatile than NewFlex Technology Co. It trades about 0.2 of its potential returns per unit of risk. NewFlex Technology Co is currently generating about 0.17 per unit of risk. If you would invest 1,092,000 in Digital Imaging Technology on September 20, 2024 and sell it today you would earn a total of 211,000 from holding Digital Imaging Technology or generate 19.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Digital Imaging Technology vs. NewFlex Technology Co
Performance |
| Timeline |
| Digital Imaging Tech |
| NewFlex Technology |
Digital Imaging and NewFlex Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digital Imaging and NewFlex Technology
The main advantage of trading using opposite Digital Imaging and NewFlex Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digital Imaging position performs unexpectedly, NewFlex 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 NewFlex Technology will offset losses from the drop in NewFlex Technology's long position.| Digital Imaging vs. Nice Information Telecommunication | Digital Imaging vs. Aprogen Healthcare Games | Digital Imaging vs. CKH Food Health | Digital Imaging vs. Insung Information Co |
| NewFlex Technology vs. Cube Entertainment | NewFlex Technology vs. Dreamus Company | NewFlex Technology vs. LG Energy Solution | NewFlex Technology vs. Dongwon System |
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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