Correlation Between Com7 PCL and Dimet Public

Can any of the company-specific risk be diversified away by investing in both Com7 PCL and Dimet Public 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 Com7 PCL and Dimet Public into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Com7 PCL and Dimet Public, you can compare the effects of market volatilities on Com7 PCL and Dimet Public 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 Com7 PCL with a short position of Dimet Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of Com7 PCL and Dimet Public.

Diversification Opportunities for Com7 PCL and Dimet Public

-0.59

Correlation Coefficient

Com7 PCL  Dimet Public

Excellent diversification

The 3 months correlation between Com7 and Dimet is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Com7 PCL and Dimet Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimet Public and Com7 PCL 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 Com7 PCL are associated (or correlated) with Dimet Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimet Public has no effect on the direction of Com7 PCL i.e., Com7 PCL and Dimet Public go up and down completely randomly.

Pair Corralation between Com7 PCL and Dimet Public

Assuming the 90 days trading horizon Com7 PCL is expected to generate 0.9 times more return on investment than Dimet Public. However, Com7 PCL is 1.11 times less risky than Dimet Public. It trades about 0.1 of its potential returns per unit of risk. Dimet Public is currently generating about -0.09 per unit of risk. If you would invest  2,440  in Com7 PCL on September 18, 2024 and sell it today you would earn a total of  335.00  from holding Com7 PCL or generate 13.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Com7 PCL  vs.  Dimet Public

Com7 PCL

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Com7 PCL are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Com7 PCL disclosed solid returns over the last few months and may actually be approaching a breakup point.

Dimet Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dimet Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Com7 PCL and Dimet Public

The main advantage of trading using opposite Com7 PCL and Dimet Public positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Com7 PCL position performs unexpectedly, Dimet Public 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 Dimet Public will offset losses from the drop in Dimet Public's long position.

The idea behind Com7 PCL and Dimet Public 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.