Correlation Between Dito CME and Converge Information
Can any of the company-specific risk be diversified away by investing in both Dito CME and Converge Information 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 Dito CME and Converge Information into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dito CME Holdings and Converge Information Communications, you can compare the effects of market volatilities on Dito CME and Converge Information 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 Dito CME with a short position of Converge Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dito CME and Converge Information.
Diversification Opportunities for Dito CME and Converge Information
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dito and Converge is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Dito CME Holdings and Converge Information Communica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Converge Information and Dito CME 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 Dito CME Holdings are associated (or correlated) with Converge Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Converge Information has no effect on the direction of Dito CME i.e., Dito CME and Converge Information go up and down completely randomly.
Pair Corralation between Dito CME and Converge Information
Assuming the 90 days trading horizon Dito CME Holdings is expected to under-perform the Converge Information. In addition to that, Dito CME is 1.13 times more volatile than Converge Information Communications. It trades about -0.04 of its total potential returns per unit of risk. Converge Information Communications is currently generating about 0.01 per unit of volatility. If you would invest 1,577 in Converge Information Communications on August 25, 2024 and sell it today you would earn a total of 3.00 from holding Converge Information Communications or generate 0.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dito CME Holdings vs. Converge Information Communica
Performance |
| Timeline |
| Dito CME Holdings |
| Converge Information |
Dito CME and Converge Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dito CME and Converge Information
The main advantage of trading using opposite Dito CME and Converge Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dito CME position performs unexpectedly, Converge Information 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 Converge Information will offset losses from the drop in Converge Information's long position.| Dito CME vs. Metropolitan Bank Trust | Dito CME vs. Rizal Commercial Banking | Dito CME vs. Metro Retail Stores | Dito CME vs. Jollibee Foods Corp |
| Converge Information vs. Atlas Consolidated Mining | Converge Information vs. Suntrust Home Developers | Converge Information vs. Apex Mining Co | Converge Information vs. Crown Asia Chemicals |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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