Correlation Between Digital Multimedia and Lion Chemtech
Can any of the company-specific risk be diversified away by investing in both Digital Multimedia and Lion Chemtech 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 Lion Chemtech 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 Lion Chemtech Co, you can compare the effects of market volatilities on Digital Multimedia and Lion Chemtech 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 Lion Chemtech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digital Multimedia and Lion Chemtech.
Diversification Opportunities for Digital Multimedia and Lion Chemtech
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Digital and Lion is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Digital Multimedia Technology and Lion Chemtech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion Chemtech 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 Lion Chemtech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion Chemtech has no effect on the direction of Digital Multimedia i.e., Digital Multimedia and Lion Chemtech go up and down completely randomly.
Pair Corralation between Digital Multimedia and Lion Chemtech
Assuming the 90 days trading horizon Digital Multimedia Technology is expected to under-perform the Lion Chemtech. In addition to that, Digital Multimedia is 1.08 times more volatile than Lion Chemtech Co. It trades about -0.06 of its total potential returns per unit of risk. Lion Chemtech Co is currently generating about -0.01 per unit of volatility. If you would invest 273,660 in Lion Chemtech Co on October 13, 2024 and sell it today you would lose (33,660) from holding Lion Chemtech Co or give up 12.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Digital Multimedia Technology vs. Lion Chemtech Co
Performance |
| Timeline |
| Digital Multimedia |
| Lion Chemtech |
Digital Multimedia and Lion Chemtech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digital Multimedia and Lion Chemtech
The main advantage of trading using opposite Digital Multimedia and Lion Chemtech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digital Multimedia position performs unexpectedly, Lion Chemtech 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 Lion Chemtech will offset losses from the drop in Lion Chemtech's long position.| Digital Multimedia vs. RFTech Co | Digital Multimedia vs. Vitzro Tech Co | Digital Multimedia vs. Sungchang Autotech Co | Digital Multimedia vs. Yura Tech Co |
| Lion Chemtech vs. Digital Multimedia Technology | Lion Chemtech vs. Infinitt Healthcare Co | Lion Chemtech vs. YG Entertainment | Lion Chemtech vs. Cube Entertainment |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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