Correlation Between Digital Multimedia and Daekyung Machinery
Can any of the company-specific risk be diversified away by investing in both Digital Multimedia and Daekyung Machinery 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 Multimedia and Daekyung Machinery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Digital Multimedia Technology and Daekyung Machinery Engineering, you can compare the effects of market volatilities on Digital Multimedia and Daekyung Machinery 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 Multimedia with a short position of Daekyung Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digital Multimedia and Daekyung Machinery.
Diversification Opportunities for Digital Multimedia and Daekyung Machinery
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Digital and Daekyung is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Digital Multimedia Technology and Daekyung Machinery Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daekyung Machinery and Digital Multimedia 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 Multimedia Technology are associated (or correlated) with Daekyung Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daekyung Machinery has no effect on the direction of Digital Multimedia i.e., Digital Multimedia and Daekyung Machinery go up and down completely randomly.
Pair Corralation between Digital Multimedia and Daekyung Machinery
Assuming the 90 days trading horizon Digital Multimedia Technology is expected to under-perform the Daekyung Machinery. But the stock apears to be less risky and, when comparing its historical volatility, Digital Multimedia Technology is 1.05 times less risky than Daekyung Machinery. The stock trades about -0.14 of its potential returns per unit of risk. The Daekyung Machinery Engineering is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 44,400 in Daekyung Machinery Engineering on August 30, 2024 and sell it today you would earn a total of 7,100 from holding Daekyung Machinery Engineering or generate 15.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.31% |
| Values | Daily Returns |
Digital Multimedia Technology vs. Daekyung Machinery Engineering
Performance |
| Timeline |
| Digital Multimedia |
| Daekyung Machinery |
Digital Multimedia and Daekyung Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digital Multimedia and Daekyung Machinery
The main advantage of trading using opposite Digital Multimedia and Daekyung Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digital Multimedia position performs unexpectedly, Daekyung Machinery 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 Daekyung Machinery will offset losses from the drop in Daekyung Machinery's long position.The idea behind Digital Multimedia Technology and Daekyung Machinery Engineering pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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