Correlation Between Solution Advanced and DC Media
Can any of the company-specific risk be diversified away by investing in both Solution Advanced and DC Media 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 Solution Advanced and DC Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solution Advanced Technology and DC Media CoLtd, you can compare the effects of market volatilities on Solution Advanced and DC Media 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 Solution Advanced with a short position of DC Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solution Advanced and DC Media.
Diversification Opportunities for Solution Advanced and DC Media
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Solution and 263720 is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Solution Advanced Technology and DC Media CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DC Media CoLtd and Solution Advanced 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 Solution Advanced Technology are associated (or correlated) with DC Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DC Media CoLtd has no effect on the direction of Solution Advanced i.e., Solution Advanced and DC Media go up and down completely randomly.
Pair Corralation between Solution Advanced and DC Media
Assuming the 90 days trading horizon Solution Advanced Technology is expected to under-perform the DC Media. But the stock apears to be less risky and, when comparing its historical volatility, Solution Advanced Technology is 1.51 times less risky than DC Media. The stock trades about -0.07 of its potential returns per unit of risk. The DC Media CoLtd is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,923,000 in DC Media CoLtd on September 12, 2024 and sell it today you would lose (89,000) from holding DC Media CoLtd or give up 4.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solution Advanced Technology vs. DC Media CoLtd
Performance |
| Timeline |
| Solution Advanced |
| DC Media CoLtd |
Solution Advanced and DC Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solution Advanced and DC Media
The main advantage of trading using opposite Solution Advanced and DC Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solution Advanced position performs unexpectedly, DC Media 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 DC Media will offset losses from the drop in DC Media's long position.| Solution Advanced vs. Samsung Electronics Co | Solution Advanced vs. Samsung Electronics Co | Solution Advanced vs. LG Energy Solution | Solution Advanced vs. SK Hynix |
| DC Media vs. Samsung Special Purpose | DC Media vs. Solution Advanced Technology | DC Media vs. Busan Industrial Co | DC Media vs. Busan Ind |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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