Correlation Between Energy Technologies and DMC Mining
Can any of the company-specific risk be diversified away by investing in both Energy Technologies and DMC Mining 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 Energy Technologies and DMC Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energy Technologies Limited and DMC Mining, you can compare the effects of market volatilities on Energy Technologies and DMC Mining 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 Energy Technologies with a short position of DMC Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Technologies and DMC Mining.
Diversification Opportunities for Energy Technologies and DMC Mining
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Energy and DMC is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Energy Technologies Limited and DMC Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DMC Mining and Energy Technologies 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 Energy Technologies Limited are associated (or correlated) with DMC Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DMC Mining has no effect on the direction of Energy Technologies i.e., Energy Technologies and DMC Mining go up and down completely randomly.
Pair Corralation between Energy Technologies and DMC Mining
Assuming the 90 days trading horizon Energy Technologies Limited is expected to generate 1.09 times more return on investment than DMC Mining. However, Energy Technologies is 1.09 times more volatile than DMC Mining. It trades about -0.02 of its potential returns per unit of risk. DMC Mining is currently generating about -0.03 per unit of risk. If you would invest 5.50 in Energy Technologies Limited on September 13, 2024 and sell it today you would lose (2.40) from holding Energy Technologies Limited or give up 43.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 92.37% |
| Values | Daily Returns |
Energy Technologies Limited vs. DMC Mining
Performance |
| Timeline |
| Energy Technologies |
| DMC Mining |
Energy Technologies and DMC Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energy Technologies and DMC Mining
The main advantage of trading using opposite Energy Technologies and DMC Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy Technologies position performs unexpectedly, DMC Mining 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 DMC Mining will offset losses from the drop in DMC Mining's long position.| Energy Technologies vs. Aneka Tambang Tbk | Energy Technologies vs. National Australia Bank | Energy Technologies vs. Commonwealth Bank of | Energy Technologies vs. Commonwealth Bank of |
| DMC Mining vs. Advanced Braking Technology | DMC Mining vs. Energy Technologies Limited | DMC Mining vs. Ainsworth Game Technology | DMC Mining vs. Treasury Wine Estates |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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