Correlation Between Value Added and DC Media

Can any of the company-specific risk be diversified away by investing in both Value Added and DC Media 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 Value Added and DC Media into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Value Added Technology and DC Media CoLtd, you can compare the effects of market volatilities on Value Added and DC Media 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 Value Added with a short position of DC Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Value Added and DC Media.

Diversification Opportunities for Value Added and DC Media

-0.11

Correlation Coefficient

Value Added  DC Media

Good diversification

The 3 months correlation between Value and 263720 is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Value Added Technology and DC Media CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DC Media CoLtd and Value Added 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 Value Added Technology are associated (or correlated) with DC Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DC Media CoLtd has no effect on the direction of Value Added i.e., Value Added and DC Media go up and down completely randomly.

Pair Corralation between Value Added and DC Media

Assuming the 90 days trading horizon Value Added Technology is expected to under-perform the DC Media. But the stock apears to be less risky and, when comparing its historical volatility, Value Added Technology is 1.63 times less risky than DC Media. The stock trades about -0.14 of its potential returns per unit of risk. The DC Media CoLtd is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,857,000  in DC Media CoLtd on September 3, 2024 and sell it today you would earn a total of  142,000  from holding DC Media CoLtd or generate 7.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Value Added Technology  vs.  DC Media CoLtd

Value Added Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Value Added Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

DC Media CoLtd

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in DC Media CoLtd are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, DC Media may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Value Added and DC Media

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

The idea behind Value Added Technology and DC Media 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.

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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.