Correlation Between Dimension Computer and STARLUX Airlines

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Can any of the company-specific risk be diversified away by investing in both Dimension Computer and STARLUX Airlines 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 Dimension Computer and STARLUX Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dimension Computer Technology and STARLUX Airlines Co, you can compare the effects of market volatilities on Dimension Computer and STARLUX Airlines 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 Dimension Computer with a short position of STARLUX Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimension Computer and STARLUX Airlines.

Diversification Opportunities for Dimension Computer and STARLUX Airlines

0.38
  Correlation Coefficient

Weak diversification

The 3 months correlation between Dimension and STARLUX is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Dimension Computer Technology and STARLUX Airlines Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STARLUX Airlines and Dimension Computer 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 Dimension Computer Technology are associated (or correlated) with STARLUX Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STARLUX Airlines has no effect on the direction of Dimension Computer i.e., Dimension Computer and STARLUX Airlines go up and down completely randomly.

Pair Corralation between Dimension Computer and STARLUX Airlines

Assuming the 90 days trading horizon Dimension Computer Technology is expected to generate 1.13 times more return on investment than STARLUX Airlines. However, Dimension Computer is 1.13 times more volatile than STARLUX Airlines Co. It trades about 0.04 of its potential returns per unit of risk. STARLUX Airlines Co is currently generating about 0.04 per unit of risk. If you would invest  1,635  in Dimension Computer Technology on October 4, 2024 and sell it today you would earn a total of  785.00  from holding Dimension Computer Technology or generate 48.01% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy98.96%
ValuesDaily Returns

Dimension Computer Technology  vs.  STARLUX Airlines Co

 Performance 
       Timeline  
Dimension Computer 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Dimension Computer Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Dimension Computer is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.
STARLUX Airlines 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days STARLUX Airlines Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, STARLUX Airlines is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Dimension Computer and STARLUX Airlines Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Dimension Computer and STARLUX Airlines

The main advantage of trading using opposite Dimension Computer and STARLUX Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimension Computer position performs unexpectedly, STARLUX Airlines 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 STARLUX Airlines will offset losses from the drop in STARLUX Airlines' long position.
The idea behind Dimension Computer Technology and STARLUX Airlines 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..

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