Correlation Between Contact Financial and Dice Sport
Can any of the company-specific risk be diversified away by investing in both Contact Financial and Dice Sport 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 Contact Financial and Dice Sport into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Contact Financial Holding and Dice Sport Casual, you can compare the effects of market volatilities on Contact Financial and Dice Sport 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 Contact Financial with a short position of Dice Sport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Contact Financial and Dice Sport.
Diversification Opportunities for Contact Financial and Dice Sport
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Contact and Dice is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Contact Financial Holding and Dice Sport Casual in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dice Sport Casual and Contact Financial 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 Contact Financial Holding are associated (or correlated) with Dice Sport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dice Sport Casual has no effect on the direction of Contact Financial i.e., Contact Financial and Dice Sport go up and down completely randomly.
Pair Corralation between Contact Financial and Dice Sport
Assuming the 90 days trading horizon Contact Financial is expected to generate 2.0 times less return on investment than Dice Sport. But when comparing it to its historical volatility, Contact Financial Holding is 1.17 times less risky than Dice Sport. It trades about 0.15 of its potential returns per unit of risk. Dice Sport Casual is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 174.00 in Dice Sport Casual on August 24, 2024 and sell it today you would earn a total of 33.00 from holding Dice Sport Casual or generate 18.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Contact Financial Holding vs. Dice Sport Casual
Performance |
| Timeline |
| Contact Financial Holding |
| Dice Sport Casual |
Contact Financial and Dice Sport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Contact Financial and Dice Sport
The main advantage of trading using opposite Contact Financial and Dice Sport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Contact Financial position performs unexpectedly, Dice Sport 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 Dice Sport will offset losses from the drop in Dice Sport's long position.| Contact Financial vs. Paint Chemicals Industries | Contact Financial vs. Reacap Financial Investments | Contact Financial vs. Egyptians For Investment | Contact Financial vs. Misr Oils Soap |
| Dice Sport vs. Paint Chemicals Industries | Dice Sport vs. Reacap Financial Investments | Dice Sport vs. Egyptians For Investment | Dice Sport vs. Misr Oils Soap |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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