Correlation Between DC Media and Nable Communications
Can any of the company-specific risk be diversified away by investing in both DC Media and Nable Communications 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 Nable Communications 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 Nable Communications, you can compare the effects of market volatilities on DC Media and Nable Communications 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 Nable Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of DC Media and Nable Communications.
Diversification Opportunities for DC Media and Nable Communications
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 263720 and Nable is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding DC Media Co and Nable Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nable Communications 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 Nable Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nable Communications has no effect on the direction of DC Media i.e., DC Media and Nable Communications go up and down completely randomly.
Pair Corralation between DC Media and Nable Communications
Assuming the 90 days trading horizon DC Media Co is expected to generate 2.41 times more return on investment than Nable Communications. However, DC Media is 2.41 times more volatile than Nable Communications. It trades about 0.25 of its potential returns per unit of risk. Nable Communications is currently generating about 0.07 per unit of risk. If you would invest 1,732,000 in DC Media Co on August 29, 2024 and sell it today you would earn a total of 318,000 from holding DC Media Co or generate 18.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DC Media Co vs. Nable Communications
Performance |
| Timeline |
| DC Media |
| Nable Communications |
DC Media and Nable Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DC Media and Nable Communications
The main advantage of trading using opposite DC Media and Nable Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DC Media position performs unexpectedly, Nable Communications 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 Nable Communications will offset losses from the drop in Nable Communications' long position.| DC Media vs. Busan Industrial Co | DC Media vs. Busan Ind | DC Media vs. Mirae Asset Daewoo | DC Media vs. UNISEM Co |
| Nable Communications vs. Korea Real Estate | Nable Communications vs. Korea Ratings Co | Nable Communications vs. IQuest Co | Nable Communications vs. Wonbang Tech 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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