Correlation Between Itcen and Daou Data
Can any of the company-specific risk be diversified away by investing in both Itcen and Daou Data 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 Itcen and Daou Data into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Itcen Co and Daou Data Corp, you can compare the effects of market volatilities on Itcen and Daou Data 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 Itcen with a short position of Daou Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Itcen and Daou Data.
Diversification Opportunities for Itcen and Daou Data
Very weak diversification
The 3 months correlation between Itcen and Daou is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Itcen Co and Daou Data Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daou Data Corp and Itcen 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 Itcen Co are associated (or correlated) with Daou Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daou Data Corp has no effect on the direction of Itcen i.e., Itcen and Daou Data go up and down completely randomly.
Pair Corralation between Itcen and Daou Data
Assuming the 90 days trading horizon Itcen Co is expected to under-perform the Daou Data. In addition to that, Itcen is 3.15 times more volatile than Daou Data Corp. It trades about -0.09 of its total potential returns per unit of risk. Daou Data Corp is currently generating about -0.19 per unit of volatility. If you would invest 1,060,000 in Daou Data Corp on October 14, 2024 and sell it today you would lose (46,000) from holding Daou Data Corp or give up 4.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Itcen Co vs. Daou Data Corp
Performance |
| Timeline |
| Itcen |
| Daou Data Corp |
Itcen and Daou Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Itcen and Daou Data
The main advantage of trading using opposite Itcen and Daou Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Itcen position performs unexpectedly, Daou Data 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 Data will offset losses from the drop in Daou Data's long position.| Itcen vs. Pan Entertainment Co | Itcen vs. SAMG Entertainment Co | Itcen vs. Alton Sports CoLtd | Itcen vs. Daou Data Corp |
| Daou Data vs. Dongjin Semichem Co | Daou Data vs. AhnLab Inc | Daou Data vs. Posco ICT | Daou Data vs. CJ ENM |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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