Correlation Between Damsan JSC and APG Securities

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

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

Diversification Opportunities for Damsan JSC and APG Securities

0.6

Correlation Coefficient

Damsan JSC  APG Securities

Poor diversification

The 3 months correlation between Damsan and APG is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Damsan JSC and APG Securities Joint in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APG Securities Joint and Damsan JSC 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 Damsan JSC are associated (or correlated) with APG Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APG Securities Joint has no effect on the direction of Damsan JSC i.e., Damsan JSC and APG Securities go up and down completely randomly.

Pair Corralation between Damsan JSC and APG Securities

Assuming the 90 days trading horizon Damsan JSC is expected to generate 1.54 times less return on investment than APG Securities. But when comparing it to its historical volatility, Damsan JSC is 1.29 times less risky than APG Securities. It trades about 0.4 of its potential returns per unit of risk. APG Securities Joint is currently generating about 0.48 of returns per unit of risk over similar time horizon. If you would invest  706,000  in APG Securities Joint on November 19, 2024 and sell it today you would earn a total of  187,000  from holding APG Securities Joint or generate 26.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	94.12%
Values	Daily Returns

Damsan JSC  vs.  APG Securities Joint

Damsan JSC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Damsan JSC are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Damsan JSC may actually be approaching a critical reversion point that can send shares even higher in March 2025.

APG Securities Joint

Risk-Adjusted Performance

Very Weak

Over the last 90 days APG Securities Joint has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, APG Securities is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Damsan JSC and APG Securities

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

The idea behind Damsan JSC and APG Securities Joint 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.