Correlation Between DSC Investment and CS BEARING

Can any of the company-specific risk be diversified away by investing in both DSC Investment and CS BEARING 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 DSC Investment and CS BEARING into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for DSC Investment and CS BEARING

-0.11

Correlation Coefficient

DSC Investment  CS BEARING

Good diversification

The 3 months correlation between DSC and 297090 is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding DSC Investment and CS BEARING CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CS BEARING CoLtd and DSC Investment 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 DSC Investment are associated (or correlated) with CS BEARING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CS BEARING CoLtd has no effect on the direction of DSC Investment i.e., DSC Investment and CS BEARING go up and down completely randomly.

Pair Corralation between DSC Investment and CS BEARING

Assuming the 90 days trading horizon DSC Investment is expected to generate 2.04 times more return on investment than CS BEARING. However, DSC Investment is 2.04 times more volatile than CS BEARING CoLtd. It trades about 0.13 of its potential returns per unit of risk. CS BEARING CoLtd is currently generating about 0.05 per unit of risk. If you would invest  288,000  in DSC Investment on December 30, 2024 and sell it today you would earn a total of  144,500  from holding DSC Investment or generate 50.17% return on investment over 90 days.

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

DSC Investment  vs.  CS BEARING CoLtd

DSC Investment

Risk-Adjusted Performance

OK

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

CS BEARING CoLtd

Risk-Adjusted Performance

Insignificant

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

Pair Trading with DSC Investment and CS BEARING

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

The idea behind DSC Investment and CS BEARING 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.