Correlation Between DC Media and Innodep
Can any of the company-specific risk be diversified away by investing in both DC Media and Innodep 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 Innodep 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 Innodep, you can compare the effects of market volatilities on DC Media and Innodep 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 Innodep. Check out your portfolio center. Please also check ongoing floating volatility patterns of DC Media and Innodep.
Diversification Opportunities for DC Media and Innodep
Significant diversification
The 3 months correlation between 263720 and Innodep is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding DC Media Co and Innodep in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innodep 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 Innodep. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innodep has no effect on the direction of DC Media i.e., DC Media and Innodep go up and down completely randomly.
Pair Corralation between DC Media and Innodep
Assuming the 90 days trading horizon DC Media Co is expected to generate 1.32 times more return on investment than Innodep. However, DC Media is 1.32 times more volatile than Innodep. It trades about 0.1 of its potential returns per unit of risk. Innodep is currently generating about -0.05 per unit of risk. If you would invest 1,790,000 in DC Media Co on September 5, 2024 and sell it today you would earn a total of 120,000 from holding DC Media Co or generate 6.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DC Media Co vs. Innodep
Performance |
| Timeline |
| DC Media |
| Innodep |
DC Media and Innodep Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DC Media and Innodep
The main advantage of trading using opposite DC Media and Innodep positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DC Media position performs unexpectedly, Innodep 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 Innodep will offset losses from the drop in Innodep's long position.| DC Media vs. Busan Industrial Co | DC Media vs. UNISEM Co | DC Media vs. RPBio Inc | DC Media vs. Finebesteel |
| Innodep vs. Woori Technology Investment | Innodep vs. EBEST Investment Securities | Innodep vs. Iljin Display | Innodep vs. NH Investment Securities |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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