Correlation Between East Coast and Dimet Public
Can any of the company-specific risk be diversified away by investing in both East Coast and Dimet Public 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 East Coast and Dimet Public into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between East Coast Furnitech and Dimet Public, you can compare the effects of market volatilities on East Coast and Dimet Public 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 East Coast with a short position of Dimet Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of East Coast and Dimet Public.
Diversification Opportunities for East Coast and Dimet Public
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between East and Dimet is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding East Coast Furnitech and Dimet Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimet Public and East Coast 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 East Coast Furnitech are associated (or correlated) with Dimet Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimet Public has no effect on the direction of East Coast i.e., East Coast and Dimet Public go up and down completely randomly.
Pair Corralation between East Coast and Dimet Public
Assuming the 90 days trading horizon East Coast Furnitech is expected to under-perform the Dimet Public. In addition to that, East Coast is 1.6 times more volatile than Dimet Public. It trades about -0.2 of its total potential returns per unit of risk. Dimet Public is currently generating about -0.21 per unit of volatility. If you would invest 25.00 in Dimet Public on September 1, 2024 and sell it today you would lose (2.00) from holding Dimet Public or give up 8.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
East Coast Furnitech vs. Dimet Public
Performance |
| Timeline |
| East Coast Furnitech |
| Dimet Public |
East Coast and Dimet Public Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with East Coast and Dimet Public
The main advantage of trading using opposite East Coast and Dimet Public positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if East Coast position performs unexpectedly, Dimet Public 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 Dimet Public will offset losses from the drop in Dimet Public's long position.| East Coast vs. G Capital Public | East Coast vs. Filter Vision Public | East Coast vs. Chewathai Public | East Coast vs. The Erawan Group |
| Dimet Public vs. ARIP Public | Dimet Public vs. G Capital Public | Dimet Public vs. Hydrotek Public | Dimet Public vs. East Coast Furnitech |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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