Correlation Between Crown Asia and DL Industries
Can any of the company-specific risk be diversified away by investing in both Crown Asia and DL Industries 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 Crown Asia and DL Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Crown Asia Chemicals and DL Industries, you can compare the effects of market volatilities on Crown Asia and DL Industries 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 Crown Asia with a short position of DL Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crown Asia and DL Industries.
Diversification Opportunities for Crown Asia and DL Industries
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Crown and DNL is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Crown Asia Chemicals and DL Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DL Industries and Crown 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 Crown Asia Chemicals are associated (or correlated) with DL Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DL Industries has no effect on the direction of Crown Asia i.e., Crown Asia and DL Industries go up and down completely randomly.
Pair Corralation between Crown Asia and DL Industries
Assuming the 90 days trading horizon Crown Asia Chemicals is expected to generate 1.48 times more return on investment than DL Industries. However, Crown Asia is 1.48 times more volatile than DL Industries. It trades about 0.03 of its potential returns per unit of risk. DL Industries is currently generating about -0.03 per unit of risk. If you would invest 141.00 in Crown Asia Chemicals on October 25, 2024 and sell it today you would earn a total of 34.00 from holding Crown Asia Chemicals or generate 24.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.54% |
| Values | Daily Returns |
Crown Asia Chemicals vs. DL Industries
Performance |
| Timeline |
| Crown Asia Chemicals |
| DL Industries |
Crown Asia and DL Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crown Asia and DL Industries
The main advantage of trading using opposite Crown Asia and DL Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crown Asia position performs unexpectedly, DL Industries 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 DL Industries will offset losses from the drop in DL Industries' long position.| Crown Asia vs. DL Industries | Crown Asia vs. Dizon Copper Silver | Crown Asia vs. GT Capital Holdings | Crown Asia vs. Allhome Corp |
| DL Industries vs. Robinsons Retail Holdings | DL Industries vs. Apex Mining Co | DL Industries vs. Integrated Micro Electronics | DL Industries vs. National Reinsurance |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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