Correlation Between Deswell Industries and VerifyMe
Can any of the company-specific risk be diversified away by investing in both Deswell Industries and VerifyMe 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 VerifyMe into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deswell Industries and VerifyMe, you can compare the effects of market volatilities on Deswell Industries and VerifyMe 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 VerifyMe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deswell Industries and VerifyMe.
Diversification Opportunities for Deswell Industries and VerifyMe
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Deswell and VerifyMe is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Deswell Industries and VerifyMe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VerifyMe 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 VerifyMe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VerifyMe has no effect on the direction of Deswell Industries i.e., Deswell Industries and VerifyMe go up and down completely randomly.
Pair Corralation between Deswell Industries and VerifyMe
Given the investment horizon of 90 days Deswell Industries is expected to generate 0.16 times more return on investment than VerifyMe. However, Deswell Industries is 6.15 times less risky than VerifyMe. It trades about 0.24 of its potential returns per unit of risk. VerifyMe is currently generating about -0.25 per unit of risk. If you would invest 254.00 in Deswell Industries on September 1, 2024 and sell it today you would earn a total of 18.00 from holding Deswell Industries or generate 7.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Deswell Industries vs. VerifyMe
Performance |
| Timeline |
| Deswell Industries |
| VerifyMe |
Deswell Industries and VerifyMe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deswell Industries and VerifyMe
The main advantage of trading using opposite Deswell Industries and VerifyMe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deswell Industries position performs unexpectedly, VerifyMe 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 VerifyMe will offset losses from the drop in VerifyMe's long position.| Deswell Industries vs. Desktop Metal | Deswell Industries vs. Fabrinet | Deswell Industries vs. Knowles Cor | Deswell Industries vs. Ubiquiti Networks |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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