Correlation Between Dimension Computer and Cameo Communications

Can any of the company-specific risk be diversified away by investing in both Dimension Computer and Cameo Communications 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 Cameo Communications 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 Cameo Communications, you can compare the effects of market volatilities on Dimension Computer and Cameo Communications 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 Cameo Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimension Computer and Cameo Communications.

Diversification Opportunities for Dimension Computer and Cameo Communications

0.15

Correlation Coefficient

Dimension Computer  Cameo Communications

Average diversification

The 3 months correlation between Dimension and Cameo is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Dimension Computer Technology and Cameo Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cameo Communications 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 Cameo Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cameo Communications has no effect on the direction of Dimension Computer i.e., Dimension Computer and Cameo Communications go up and down completely randomly.

Pair Corralation between Dimension Computer and Cameo Communications

Assuming the 90 days trading horizon Dimension Computer Technology is expected to under-perform the Cameo Communications. But the stock apears to be less risky and, when comparing its historical volatility, Dimension Computer Technology is 1.42 times less risky than Cameo Communications. The stock trades about -0.16 of its potential returns per unit of risk. The Cameo Communications is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,120  in Cameo Communications on October 9, 2024 and sell it today you would earn a total of  0.00  from holding Cameo Communications or generate 0.0% return on investment over 90 days.

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

Dimension Computer Technology  vs.  Cameo Communications

Dimension Computer

Risk-Adjusted Performance

0 of 100

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.

Cameo Communications

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cameo Communications are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Cameo Communications may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Dimension Computer and Cameo Communications

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

The idea behind Dimension Computer Technology and Cameo Communications 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.