Correlation Between Concord Securities and Davicom Semiconductor

Can any of the company-specific risk be diversified away by investing in both Concord Securities and Davicom Semiconductor 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 Concord Securities and Davicom Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Concord Securities Co and Davicom Semiconductor, you can compare the effects of market volatilities on Concord Securities and Davicom Semiconductor 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 Concord Securities with a short position of Davicom Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Concord Securities and Davicom Semiconductor.

Diversification Opportunities for Concord Securities and Davicom Semiconductor

0.8

Correlation Coefficient

Concord Securities  Davicom Semiconductor

Very poor diversification

The 3 months correlation between Concord and Davicom is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Concord Securities Co and Davicom Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Davicom Semiconductor and Concord Securities 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 Concord Securities Co are associated (or correlated) with Davicom Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Davicom Semiconductor has no effect on the direction of Concord Securities i.e., Concord Securities and Davicom Semiconductor go up and down completely randomly.

Pair Corralation between Concord Securities and Davicom Semiconductor

Assuming the 90 days trading horizon Concord Securities Co is expected to generate 0.4 times more return on investment than Davicom Semiconductor. However, Concord Securities Co is 2.48 times less risky than Davicom Semiconductor. It trades about -0.17 of its potential returns per unit of risk. Davicom Semiconductor is currently generating about -0.17 per unit of risk. If you would invest  1,425  in Concord Securities Co on October 6, 2024 and sell it today you would lose (100.00) from holding Concord Securities Co or give up 7.02% of portfolio value over 90 days.

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

Concord Securities Co  vs.  Davicom Semiconductor

Concord Securities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Concord Securities Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Davicom Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Davicom Semiconductor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Concord Securities and Davicom Semiconductor

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

The idea behind Concord Securities Co and Davicom Semiconductor 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.