Correlation Between Alton Sports and Daou Technology
Can any of the company-specific risk be diversified away by investing in both Alton Sports 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 Alton Sports and Daou Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alton Sports CoLtd and Daou Technology, you can compare the effects of market volatilities on Alton Sports 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 Alton Sports with a short position of Daou Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alton Sports and Daou Technology.
Diversification Opportunities for Alton Sports and Daou Technology
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Alton and Daou is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Alton Sports CoLtd and Daou Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daou Technology and Alton Sports 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 Alton Sports CoLtd 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 Alton Sports i.e., Alton Sports and Daou Technology go up and down completely randomly.
Pair Corralation between Alton Sports and Daou Technology
Assuming the 90 days trading horizon Alton Sports CoLtd is expected to under-perform the Daou Technology. In addition to that, Alton Sports is 1.53 times more volatile than Daou Technology. It trades about -0.42 of its total potential returns per unit of risk. Daou Technology is currently generating about 0.01 per unit of volatility. If you would invest 1,825,000 in Daou Technology on August 28, 2024 and sell it today you would earn a total of 3,000 from holding Daou Technology or generate 0.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alton Sports CoLtd vs. Daou Technology
Performance |
| Timeline |
| Alton Sports CoLtd |
| Daou Technology |
Alton Sports and Daou Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alton Sports and Daou Technology
The main advantage of trading using opposite Alton Sports and Daou Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alton Sports 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.| Alton Sports vs. Busan Industrial Co | Alton Sports vs. Busan Ind | Alton Sports vs. Mirae Asset Daewoo | Alton Sports vs. UNISEM Co |
| Daou Technology vs. DB Insurance Co | Daou Technology vs. Hana Financial | Daou Technology vs. Dgb Financial | Daou Technology vs. CKH Food Health |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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