Correlation Between Digital Imaging and Hotel Shilla

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

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

Diversification Opportunities for Digital Imaging and Hotel Shilla

-0.05

Correlation Coefficient

Digital Imaging  Hotel Shilla

Good diversification

The 3 months correlation between Digital and Hotel is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Digital Imaging Technology and Hotel Shilla Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hotel Shilla and Digital Imaging 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 Digital Imaging Technology are associated (or correlated) with Hotel Shilla. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hotel Shilla has no effect on the direction of Digital Imaging i.e., Digital Imaging and Hotel Shilla go up and down completely randomly.

Pair Corralation between Digital Imaging and Hotel Shilla

Assuming the 90 days trading horizon Digital Imaging Technology is expected to generate 2.56 times more return on investment than Hotel Shilla. However, Digital Imaging is 2.56 times more volatile than Hotel Shilla Co. It trades about 0.12 of its potential returns per unit of risk. Hotel Shilla Co is currently generating about 0.12 per unit of risk. If you would invest  1,242,000  in Digital Imaging Technology on December 25, 2024 and sell it today you would earn a total of  338,000  from holding Digital Imaging Technology or generate 27.21% return on investment over 90 days.

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

Digital Imaging Technology  vs.  Hotel Shilla Co

Digital Imaging Tech

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Digital Imaging Technology are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Digital Imaging sustained solid returns over the last few months and may actually be approaching a breakup point.

Hotel Shilla

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hotel Shilla Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hotel Shilla sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Digital Imaging and Hotel Shilla

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

The idea behind Digital Imaging Technology and Hotel Shilla Co 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.