Correlation Between Lindeman Asia and Digital Power
Can any of the company-specific risk be diversified away by investing in both Lindeman Asia 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 Lindeman Asia and Digital Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lindeman Asia Investment and Digital Power Communications, you can compare the effects of market volatilities on Lindeman Asia 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 Lindeman Asia with a short position of Digital Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lindeman Asia and Digital Power.
Diversification Opportunities for Lindeman Asia and Digital Power
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Lindeman and Digital is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Lindeman Asia Investment 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 Lindeman Asia 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 Lindeman Asia Investment 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 Lindeman Asia i.e., Lindeman Asia and Digital Power go up and down completely randomly.
Pair Corralation between Lindeman Asia and Digital Power
Assuming the 90 days trading horizon Lindeman Asia Investment is expected to under-perform the Digital Power. In addition to that, Lindeman Asia is 1.64 times more volatile than Digital Power Communications. It trades about -0.05 of its total potential returns per unit of risk. Digital Power Communications is currently generating about 0.05 per unit of volatility. If you would invest 643,000 in Digital Power Communications on August 28, 2024 and sell it today you would earn a total of 140,000 from holding Digital Power Communications or generate 21.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lindeman Asia Investment vs. Digital Power Communications
Performance |
| Timeline |
| Lindeman Asia Investment |
| Digital Power Commun |
Lindeman Asia and Digital Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lindeman Asia and Digital Power
The main advantage of trading using opposite Lindeman Asia and Digital Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lindeman Asia 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.| Lindeman Asia vs. HB Technology TD | Lindeman Asia vs. Daou Technology | Lindeman Asia vs. Orbitech Co | Lindeman Asia vs. POSCO M TECH Co |
| Digital Power vs. National Plastic Co | Digital Power vs. LS Materials | Digital Power vs. Automobile Pc | Digital Power vs. Alton Sports CoLtd |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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