Correlation Between Deswell Industries and Daktronics
Can any of the company-specific risk be diversified away by investing in both Deswell Industries and Daktronics 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 Deswell Industries and Daktronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deswell Industries and Daktronics, you can compare the effects of market volatilities on Deswell Industries and Daktronics 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 Deswell Industries with a short position of Daktronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deswell Industries and Daktronics.
Diversification Opportunities for Deswell Industries and Daktronics
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Deswell and Daktronics is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Deswell Industries and Daktronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daktronics and Deswell Industries 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 Deswell Industries are associated (or correlated) with Daktronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daktronics has no effect on the direction of Deswell Industries i.e., Deswell Industries and Daktronics go up and down completely randomly.
Pair Corralation between Deswell Industries and Daktronics
Given the investment horizon of 90 days Deswell Industries is expected to generate 4.49 times less return on investment than Daktronics. But when comparing it to its historical volatility, Deswell Industries is 1.77 times less risky than Daktronics. It trades about 0.08 of its potential returns per unit of risk. Daktronics is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 1,289 in Daktronics on August 24, 2024 and sell it today you would earn a total of 145.00 from holding Daktronics or generate 11.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Deswell Industries vs. Daktronics
Performance |
| Timeline |
| Deswell Industries |
| Daktronics |
Deswell Industries and Daktronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deswell Industries and Daktronics
The main advantage of trading using opposite Deswell Industries and Daktronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deswell Industries position performs unexpectedly, Daktronics 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 Daktronics will offset losses from the drop in Daktronics' long position.| Deswell Industries vs. Ieh Corp | Deswell Industries vs. LGL Group | Deswell Industries vs. Micropac Industries | Deswell Industries vs. SigmaTron International |
| Daktronics vs. Plexus Corp | Daktronics vs. OSI Systems | Daktronics vs. CTS Corporation | Daktronics vs. Benchmark Electronics |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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