Correlation Between Eugene Technology and Digital Multimedia

Can any of the company-specific risk be diversified away by investing in both Eugene Technology and Digital Multimedia 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 Eugene Technology and Digital Multimedia into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Eugene Technology and Digital Multimedia

0.57

Correlation Coefficient

Eugene Technology  Digital Multimedia

Very weak diversification

The 3 months correlation between Eugene and Digital is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Eugene Technology CoLtd and Digital Multimedia Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital Multimedia and Eugene 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 Eugene Technology CoLtd are associated (or correlated) with Digital Multimedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital Multimedia has no effect on the direction of Eugene Technology i.e., Eugene Technology and Digital Multimedia go up and down completely randomly.

Pair Corralation between Eugene Technology and Digital Multimedia

Assuming the 90 days trading horizon Eugene Technology CoLtd is expected to generate 0.75 times more return on investment than Digital Multimedia. However, Eugene Technology CoLtd is 1.34 times less risky than Digital Multimedia. It trades about 0.22 of its potential returns per unit of risk. Digital Multimedia Technology is currently generating about 0.14 per unit of risk. If you would invest  3,085,000  in Eugene Technology CoLtd on December 25, 2024 and sell it today you would earn a total of  1,305,000  from holding Eugene Technology CoLtd or generate 42.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.25%
Values	Daily Returns

Eugene Technology CoLtd  vs.  Digital Multimedia Technology

Eugene Technology CoLtd

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Eugene Technology CoLtd are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Eugene Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

Digital Multimedia

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Digital Multimedia Technology are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Digital Multimedia sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eugene Technology and Digital Multimedia

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

The idea behind Eugene Technology CoLtd and Digital Multimedia Technology 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.