Correlation Between Next Entertainment and Digital Power
Can any of the company-specific risk be diversified away by investing in both Next Entertainment and Digital Power 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 Next Entertainment and Digital Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Next Entertainment World and Digital Power Communications, you can compare the effects of market volatilities on Next Entertainment and Digital Power 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 Next Entertainment with a short position of Digital Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Next Entertainment and Digital Power.
Diversification Opportunities for Next Entertainment and Digital Power
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Next and Digital is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Next Entertainment World and Digital Power Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital Power Commun and Next Entertainment 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 Next Entertainment World are associated (or correlated) with Digital Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital Power Commun has no effect on the direction of Next Entertainment i.e., Next Entertainment and Digital Power go up and down completely randomly.
Pair Corralation between Next Entertainment and Digital Power
Assuming the 90 days trading horizon Next Entertainment is expected to generate 1.21 times less return on investment than Digital Power. In addition to that, Next Entertainment is 1.42 times more volatile than Digital Power Communications. It trades about 0.08 of its total potential returns per unit of risk. Digital Power Communications is currently generating about 0.13 per unit of volatility. If you would invest 828,121 in Digital Power Communications on October 11, 2024 and sell it today you would earn a total of 34,879 from holding Digital Power Communications or generate 4.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Next Entertainment World vs. Digital Power Communications
Performance |
| Timeline |
| Next Entertainment World |
| Digital Power Commun |
Next Entertainment and Digital Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Next Entertainment and Digital Power
The main advantage of trading using opposite Next Entertainment and Digital Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Next Entertainment position performs unexpectedly, Digital Power 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 Power will offset losses from the drop in Digital Power's long position.| Next Entertainment vs. Chorokbaem Healthcare Co | Next Entertainment vs. Lion Chemtech Co | Next Entertainment vs. Automobile Pc | Next Entertainment vs. ABOV Semiconductor Co |
| Digital Power vs. Namhwa Industrial Co | Digital Power vs. Echomarketing CoLtd | Digital Power vs. Aprogen Healthcare Games | Digital Power vs. LG Household Healthcare |
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 Stocks Directory module to find actively traded stocks across global markets.
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