Correlation Between Dhc Software and Ligao Foods

Can any of the company-specific risk be diversified away by investing in both Dhc Software and Ligao Foods 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 Dhc Software and Ligao Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dhc Software Co and Ligao Foods CoLtd, you can compare the effects of market volatilities on Dhc Software and Ligao Foods 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 Dhc Software with a short position of Ligao Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dhc Software and Ligao Foods.

Diversification Opportunities for Dhc Software and Ligao Foods

0.54

Correlation Coefficient

Dhc Software  Ligao Foods

Very weak diversification

The 3 months correlation between Dhc and Ligao is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Dhc Software Co and Ligao Foods CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ligao Foods CoLtd and Dhc Software 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 Dhc Software Co are associated (or correlated) with Ligao Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ligao Foods CoLtd has no effect on the direction of Dhc Software i.e., Dhc Software and Ligao Foods go up and down completely randomly.

Pair Corralation between Dhc Software and Ligao Foods

Assuming the 90 days trading horizon Dhc Software Co is expected to generate 0.86 times more return on investment than Ligao Foods. However, Dhc Software Co is 1.17 times less risky than Ligao Foods. It trades about 0.02 of its potential returns per unit of risk. Ligao Foods CoLtd is currently generating about -0.05 per unit of risk. If you would invest  559.00  in Dhc Software Co on October 9, 2024 and sell it today you would earn a total of  92.00  from holding Dhc Software Co or generate 16.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Dhc Software Co  vs.  Ligao Foods CoLtd

Dhc Software

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dhc Software Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Dhc Software may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Ligao Foods CoLtd

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ligao Foods CoLtd are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Ligao Foods is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dhc Software and Ligao Foods

The main advantage of trading using opposite Dhc Software and Ligao Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dhc Software position performs unexpectedly, Ligao Foods 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 Ligao Foods will offset losses from the drop in Ligao Foods' long position.

The idea behind Dhc Software Co and Ligao Foods CoLtd pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.