Correlation Between Elcom Technology and DIC Holdings
Can any of the company-specific risk be diversified away by investing in both Elcom Technology and DIC Holdings 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 Elcom Technology and DIC Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elcom Technology Communications and DIC Holdings Construction, you can compare the effects of market volatilities on Elcom Technology and DIC Holdings 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 Elcom Technology with a short position of DIC Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elcom Technology and DIC Holdings.
Diversification Opportunities for Elcom Technology and DIC Holdings
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Elcom and DIC is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Elcom Technology Communication and DIC Holdings Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DIC Holdings Construction and Elcom Technology 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 Elcom Technology Communications are associated (or correlated) with DIC Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DIC Holdings Construction has no effect on the direction of Elcom Technology i.e., Elcom Technology and DIC Holdings go up and down completely randomly.
Pair Corralation between Elcom Technology and DIC Holdings
Assuming the 90 days trading horizon Elcom Technology is expected to generate 2.8 times less return on investment than DIC Holdings. But when comparing it to its historical volatility, Elcom Technology Communications is 2.06 times less risky than DIC Holdings. It trades about 0.12 of its potential returns per unit of risk. DIC Holdings Construction is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,255,000 in DIC Holdings Construction on September 13, 2024 and sell it today you would earn a total of 160,000 from holding DIC Holdings Construction or generate 12.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elcom Technology Communication vs. DIC Holdings Construction
Performance |
| Timeline |
| Elcom Technology Com |
| DIC Holdings Construction |
Elcom Technology and DIC Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elcom Technology and DIC Holdings
The main advantage of trading using opposite Elcom Technology and DIC Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elcom Technology position performs unexpectedly, DIC Holdings 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 DIC Holdings will offset losses from the drop in DIC Holdings' long position.| Elcom Technology vs. FIT INVEST JSC | Elcom Technology vs. Damsan JSC | Elcom Technology vs. An Phat Plastic | Elcom Technology vs. Alphanam ME |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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