Correlation Between Dimension Computer and Higher Way
Can any of the company-specific risk be diversified away by investing in both Dimension Computer and Higher Way 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 Dimension Computer and Higher Way into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dimension Computer Technology and Higher Way Electronic, you can compare the effects of market volatilities on Dimension Computer and Higher Way 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 Dimension Computer with a short position of Higher Way. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimension Computer and Higher Way.
Diversification Opportunities for Dimension Computer and Higher Way
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Dimension and Higher is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Dimension Computer Technology and Higher Way Electronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Higher Way Electronic and Dimension Computer 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 Dimension Computer Technology are associated (or correlated) with Higher Way. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Higher Way Electronic has no effect on the direction of Dimension Computer i.e., Dimension Computer and Higher Way go up and down completely randomly.
Pair Corralation between Dimension Computer and Higher Way
Assuming the 90 days trading horizon Dimension Computer Technology is expected to generate 1.73 times more return on investment than Higher Way. However, Dimension Computer is 1.73 times more volatile than Higher Way Electronic. It trades about 0.03 of its potential returns per unit of risk. Higher Way Electronic is currently generating about -0.45 per unit of risk. If you would invest 2,560 in Dimension Computer Technology on October 24, 2024 and sell it today you would earn a total of 25.00 from holding Dimension Computer Technology or generate 0.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dimension Computer Technology vs. Higher Way Electronic
Performance |
| Timeline |
| Dimension Computer |
| Higher Way Electronic |
Dimension Computer and Higher Way Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dimension Computer and Higher Way
The main advantage of trading using opposite Dimension Computer and Higher Way positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimension Computer position performs unexpectedly, Higher Way 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 Higher Way will offset losses from the drop in Higher Way's long position.| Dimension Computer vs. Information Technology Total | Dimension Computer vs. Asmedia Technology | Dimension Computer vs. Data International Co | Dimension Computer vs. Acelon Chemicals Fiber |
| Higher Way vs. Microelectronics Technology | Higher Way vs. Jetwell Computer Co | Higher Way vs. Yuan High Tech Development | Higher Way vs. Emerging Display Technologies |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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