Correlation Between Crypto and Diguang Intl

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

By analyzing existing cross correlation between Crypto Co and Diguang Intl Dev, you can compare the effects of market volatilities on Crypto and Diguang Intl 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 Crypto with a short position of Diguang Intl. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crypto and Diguang Intl.

Diversification Opportunities for Crypto and Diguang Intl

0.07

Correlation Coefficient

Crypto  Diguang Intl

Significant diversification

The 3 months correlation between Crypto and Diguang is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Crypto Co and Diguang Intl Dev in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diguang Intl Dev and Crypto 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 Crypto Co are associated (or correlated) with Diguang Intl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diguang Intl Dev has no effect on the direction of Crypto i.e., Crypto and Diguang Intl go up and down completely randomly.

Pair Corralation between Crypto and Diguang Intl

Given the investment horizon of 90 days Crypto is expected to generate 6.83 times less return on investment than Diguang Intl. But when comparing it to its historical volatility, Crypto Co is 3.57 times less risky than Diguang Intl. It trades about 0.05 of its potential returns per unit of risk. Diguang Intl Dev is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  0.02  in Diguang Intl Dev on October 10, 2024 and sell it today you would earn a total of  0.07  from holding Diguang Intl Dev or generate 350.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

Crypto Co  vs.  Diguang Intl Dev

Crypto

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crypto Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Diguang Intl Dev

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Diguang Intl Dev are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Diguang Intl reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Crypto and Diguang Intl

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

The idea behind Crypto Co and Diguang Intl Dev 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.