Correlation Between DC Media and Hanshin Construction
Can any of the company-specific risk be diversified away by investing in both DC Media and Hanshin Construction 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 DC Media and Hanshin Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DC Media Co and Hanshin Construction Co, you can compare the effects of market volatilities on DC Media and Hanshin Construction 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 DC Media with a short position of Hanshin Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of DC Media and Hanshin Construction.
Diversification Opportunities for DC Media and Hanshin Construction
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between 263720 and Hanshin is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding DC Media Co and Hanshin Construction Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanshin Construction and DC Media 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 DC Media Co are associated (or correlated) with Hanshin Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanshin Construction has no effect on the direction of DC Media i.e., DC Media and Hanshin Construction go up and down completely randomly.
Pair Corralation between DC Media and Hanshin Construction
Assuming the 90 days trading horizon DC Media Co is expected to under-perform the Hanshin Construction. In addition to that, DC Media is 4.12 times more volatile than Hanshin Construction Co. It trades about -0.25 of its total potential returns per unit of risk. Hanshin Construction Co is currently generating about -0.08 per unit of volatility. If you would invest 639,000 in Hanshin Construction Co on October 29, 2024 and sell it today you would lose (10,000) from holding Hanshin Construction Co or give up 1.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DC Media Co vs. Hanshin Construction Co
Performance |
| Timeline |
| DC Media |
| Hanshin Construction |
DC Media and Hanshin Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DC Media and Hanshin Construction
The main advantage of trading using opposite DC Media and Hanshin Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DC Media position performs unexpectedly, Hanshin Construction 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 Hanshin Construction will offset losses from the drop in Hanshin Construction's long position.| DC Media vs. Samsung Special Purpose | DC Media vs. Busan Industrial Co | DC Media vs. Busan Ind | DC Media vs. Shinhan WTI Futures |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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