Correlation Between DSC Investment and Dragonfly
Can any of the company-specific risk be diversified away by investing in both DSC Investment and Dragonfly 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 DSC Investment and Dragonfly into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DSC Investment and Dragonfly GF Co, you can compare the effects of market volatilities on DSC Investment and Dragonfly 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 DSC Investment with a short position of Dragonfly. Check out your portfolio center. Please also check ongoing floating volatility patterns of DSC Investment and Dragonfly.
Diversification Opportunities for DSC Investment and Dragonfly
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between DSC and Dragonfly is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding DSC Investment and Dragonfly GF Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dragonfly GF and DSC Investment 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 DSC Investment are associated (or correlated) with Dragonfly. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dragonfly GF has no effect on the direction of DSC Investment i.e., DSC Investment and Dragonfly go up and down completely randomly.
Pair Corralation between DSC Investment and Dragonfly
Assuming the 90 days trading horizon DSC Investment is expected to under-perform the Dragonfly. But the stock apears to be less risky and, when comparing its historical volatility, DSC Investment is 10.14 times less risky than Dragonfly. The stock trades about -0.24 of its potential returns per unit of risk. The Dragonfly GF Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 133,500 in Dragonfly GF Co on October 25, 2024 and sell it today you would lose (2,000) from holding Dragonfly GF Co or give up 1.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DSC Investment vs. Dragonfly GF Co
Performance |
| Timeline |
| DSC Investment |
| Dragonfly GF |
DSC Investment and Dragonfly Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DSC Investment and Dragonfly
The main advantage of trading using opposite DSC Investment and Dragonfly positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DSC Investment position performs unexpectedly, Dragonfly 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 Dragonfly will offset losses from the drop in Dragonfly's long position.| DSC Investment vs. SEOJEON ELECTRIC MACHINERY | DSC Investment vs. Dongbang Transport Logistics | DSC Investment vs. Dongkuk Structures Construction | DSC Investment vs. Hanshin Construction Co |
| Dragonfly vs. Kaonmedia Co | Dragonfly vs. TK Chemical | Dragonfly vs. Next Entertainment World | Dragonfly vs. Kukdong Oil Chemicals |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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