Correlation Between Microfriend and Digital Multimedia
Can any of the company-specific risk be diversified away by investing in both Microfriend and Digital Multimedia 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 Microfriend and Digital Multimedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microfriend and Digital Multimedia Technology, you can compare the effects of market volatilities on Microfriend and Digital Multimedia 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 Microfriend with a short position of Digital Multimedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microfriend and Digital Multimedia.
Diversification Opportunities for Microfriend and Digital Multimedia
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microfriend and Digital is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Microfriend and Digital Multimedia Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital Multimedia and Microfriend 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 Microfriend are associated (or correlated) with Digital Multimedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital Multimedia has no effect on the direction of Microfriend i.e., Microfriend and Digital Multimedia go up and down completely randomly.
Pair Corralation between Microfriend and Digital Multimedia
Assuming the 90 days trading horizon Microfriend is expected to generate 1.29 times more return on investment than Digital Multimedia. However, Microfriend is 1.29 times more volatile than Digital Multimedia Technology. It trades about 0.0 of its potential returns per unit of risk. Digital Multimedia Technology is currently generating about -0.08 per unit of risk. If you would invest 452,000 in Microfriend on August 29, 2024 and sell it today you would lose (123,500) from holding Microfriend or give up 27.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.97% |
| Values | Daily Returns |
Microfriend vs. Digital Multimedia Technology
Performance |
| Timeline |
| Microfriend |
| Digital Multimedia |
Microfriend and Digital Multimedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microfriend and Digital Multimedia
The main advantage of trading using opposite Microfriend and Digital Multimedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microfriend position performs unexpectedly, Digital Multimedia 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 Digital Multimedia will offset losses from the drop in Digital Multimedia's long position.| Microfriend vs. SK Hynix | Microfriend vs. People Technology | Microfriend vs. SIMMTECH Co | Microfriend vs. Haesung DS Co |
| Digital Multimedia vs. AptaBio Therapeutics | Digital Multimedia vs. Daewoo SBI SPAC | Digital Multimedia vs. Dream Security co | Digital Multimedia vs. Microfriend |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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