Correlation Between Neo Neon and Digital China
Can any of the company-specific risk be diversified away by investing in both Neo Neon and Digital China 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 Neo Neon and Digital China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Neo Neon Holdings Limited and Digital China Holdings, you can compare the effects of market volatilities on Neo Neon and Digital China 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 Neo Neon with a short position of Digital China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neo Neon and Digital China.
Diversification Opportunities for Neo Neon and Digital China
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Neo and Digital is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Neo Neon Holdings Limited and Digital China Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital China Holdings and Neo Neon 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 Neo Neon Holdings Limited are associated (or correlated) with Digital China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital China Holdings has no effect on the direction of Neo Neon i.e., Neo Neon and Digital China go up and down completely randomly.
Pair Corralation between Neo Neon and Digital China
Assuming the 90 days trading horizon Neo Neon is expected to generate 6.66 times less return on investment than Digital China. But when comparing it to its historical volatility, Neo Neon Holdings Limited is 1.57 times less risky than Digital China. It trades about 0.02 of its potential returns per unit of risk. Digital China Holdings is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 658.00 in Digital China Holdings on September 12, 2024 and sell it today you would earn a total of 92.00 from holding Digital China Holdings or generate 13.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Neo Neon Holdings Limited vs. Digital China Holdings
Performance |
| Timeline |
| Neo Neon Holdings |
| Digital China Holdings |
Neo Neon and Digital China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Neo Neon and Digital China
The main advantage of trading using opposite Neo Neon and Digital China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Neo Neon position performs unexpectedly, Digital China 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 China will offset losses from the drop in Digital China's long position.| Neo Neon vs. ANJI Technology Co | Neo Neon vs. Emerging Display Technologies | Neo Neon vs. U Tech Media Corp | Neo Neon vs. Ruentex Development Co |
| Digital China vs. Ju Teng International | Digital China vs. Neo Neon Holdings Limited | Digital China vs. Medtecs International | Digital China vs. Vietnam Manufacturing and |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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