Correlation Between Investment and Damsan JSC

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

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

Diversification Opportunities for Investment and Damsan JSC

0.01

Correlation Coefficient

Investment  Damsan JSC

Significant diversification

The 3 months correlation between Investment and Damsan is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Investment and Industrial and Damsan JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Damsan JSC and 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 Investment and Industrial are associated (or correlated) with Damsan JSC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Damsan JSC has no effect on the direction of Investment i.e., Investment and Damsan JSC go up and down completely randomly.

Pair Corralation between Investment and Damsan JSC

Assuming the 90 days trading horizon Investment and Industrial is expected to generate 0.7 times more return on investment than Damsan JSC. However, Investment and Industrial is 1.42 times less risky than Damsan JSC. It trades about 0.06 of its potential returns per unit of risk. Damsan JSC is currently generating about -0.12 per unit of risk. If you would invest  6,737,451  in Investment and Industrial on October 6, 2024 and sell it today you would earn a total of  312,549  from holding Investment and Industrial or generate 4.64% return on investment over 90 days.

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

Investment and Industrial  vs.  Damsan JSC

Investment and Industrial

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Investment and Industrial are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, Investment is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Damsan JSC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Damsan JSC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Investment and Damsan JSC

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

The idea behind Investment and Industrial and Damsan JSC 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.