Correlation Between Digital Multimedia and RF Materials
Can any of the company-specific risk be diversified away by investing in both Digital Multimedia and RF Materials 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 RF Materials 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 RF Materials Co, you can compare the effects of market volatilities on Digital Multimedia and RF Materials 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 RF Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digital Multimedia and RF Materials.
Diversification Opportunities for Digital Multimedia and RF Materials
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Digital and 327260 is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Digital Multimedia Technology and RF Materials Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RF Materials 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 RF Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RF Materials has no effect on the direction of Digital Multimedia i.e., Digital Multimedia and RF Materials go up and down completely randomly.
Pair Corralation between Digital Multimedia and RF Materials
Assuming the 90 days trading horizon Digital Multimedia is expected to generate 186.32 times less return on investment than RF Materials. In addition to that, Digital Multimedia is 3.7 times more volatile than RF Materials Co. It trades about 0.0 of its total potential returns per unit of risk. RF Materials Co is currently generating about 0.65 per unit of volatility. If you would invest 498,500 in RF Materials Co on November 7, 2024 and sell it today you would earn a total of 73,500 from holding RF Materials Co or generate 14.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Digital Multimedia Technology vs. RF Materials Co
Performance |
| Timeline |
| Digital Multimedia |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
| RF Materials |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Digital Multimedia and RF Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digital Multimedia and RF Materials
The main advantage of trading using opposite Digital Multimedia and RF Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digital Multimedia position performs unexpectedly, RF Materials 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 RF Materials will offset losses from the drop in RF Materials' long position.| Digital Multimedia vs. Ssangyong Materials Corp | Digital Multimedia vs. Korea Information Communications | Digital Multimedia vs. Kaonmedia Co | Digital Multimedia vs. FNC Entertainment Co |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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