Correlation Between Daewoo SBI and Digital Power
Can any of the company-specific risk be diversified away by investing in both Daewoo SBI 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 Daewoo SBI and Digital Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daewoo SBI SPAC and Digital Power Communications, you can compare the effects of market volatilities on Daewoo SBI 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 Daewoo SBI with a short position of Digital Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daewoo SBI and Digital Power.
Diversification Opportunities for Daewoo SBI and Digital Power
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Daewoo and Digital is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Daewoo SBI SPAC 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 Daewoo SBI 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 Daewoo SBI SPAC 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 Daewoo SBI i.e., Daewoo SBI and Digital Power go up and down completely randomly.
Pair Corralation between Daewoo SBI and Digital Power
Assuming the 90 days trading horizon Daewoo SBI SPAC is expected to under-perform the Digital Power. But the stock apears to be less risky and, when comparing its historical volatility, Daewoo SBI SPAC is 1.24 times less risky than Digital Power. The stock trades about -0.06 of its potential returns per unit of risk. The Digital Power Communications is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 573,014 in Digital Power Communications on August 29, 2024 and sell it today you would earn a total of 226,986 from holding Digital Power Communications or generate 39.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daewoo SBI SPAC vs. Digital Power Communications
Performance |
| Timeline |
| Daewoo SBI SPAC |
| Digital Power Commun |
Daewoo SBI and Digital Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daewoo SBI and Digital Power
The main advantage of trading using opposite Daewoo SBI and Digital Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daewoo SBI 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.| Daewoo SBI vs. Deutsch Motors | Daewoo SBI vs. Hanjinkal | Daewoo SBI vs. Busan Industrial Co | Daewoo SBI vs. Busan Ind |
| Digital Power vs. National Plastic Co | Digital Power vs. LS Materials | Digital Power vs. Automobile Pc | Digital Power vs. Alton Sports CoLtd |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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