Correlation Between Echomarketing CoLtd and Digital Power
Can any of the company-specific risk be diversified away by investing in both Echomarketing CoLtd 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 Echomarketing CoLtd and Digital Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Echomarketing CoLtd and Digital Power Communications, you can compare the effects of market volatilities on Echomarketing CoLtd 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 Echomarketing CoLtd with a short position of Digital Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Echomarketing CoLtd and Digital Power.
Diversification Opportunities for Echomarketing CoLtd and Digital Power
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Echomarketing and Digital is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Echomarketing CoLtd 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 Echomarketing CoLtd 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 Echomarketing CoLtd 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 Echomarketing CoLtd i.e., Echomarketing CoLtd and Digital Power go up and down completely randomly.
Pair Corralation between Echomarketing CoLtd and Digital Power
Assuming the 90 days trading horizon Echomarketing CoLtd is expected to generate 1.38 times more return on investment than Digital Power. However, Echomarketing CoLtd is 1.38 times more volatile than Digital Power Communications. It trades about -0.01 of its potential returns per unit of risk. Digital Power Communications is currently generating about -0.02 per unit of risk. If you would invest 1,063,000 in Echomarketing CoLtd on November 2, 2024 and sell it today you would lose (66,000) from holding Echomarketing CoLtd or give up 6.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Echomarketing CoLtd vs. Digital Power Communications
Performance |
| Timeline |
| Echomarketing CoLtd |
| Digital Power Commun |
Echomarketing CoLtd and Digital Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Echomarketing CoLtd and Digital Power
The main advantage of trading using opposite Echomarketing CoLtd and Digital Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Echomarketing CoLtd 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.| Echomarketing CoLtd vs. AfreecaTV Co | Echomarketing CoLtd vs. Seegene | Echomarketing CoLtd vs. SS TECH | Echomarketing CoLtd vs. Ezwelfare Co |
| Digital Power vs. Inzi Display CoLtd | Digital Power vs. Tuksu Engineering ConstructionLtd | Digital Power vs. Korea Computer | Digital Power vs. LG Display 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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