Correlation Between DIC Holdings and Ducgiang Chemicals

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

By analyzing existing cross correlation between DIC Holdings Construction and Ducgiang Chemicals Detergent, you can compare the effects of market volatilities on DIC Holdings and Ducgiang Chemicals 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 DIC Holdings with a short position of Ducgiang Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of DIC Holdings and Ducgiang Chemicals.

Diversification Opportunities for DIC Holdings and Ducgiang Chemicals

0.14

Correlation Coefficient

DIC Holdings  Ducgiang Chemicals

Average diversification

The 3 months correlation between DIC and Ducgiang is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding DIC Holdings Construction and Ducgiang Chemicals Detergent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ducgiang Chemicals and DIC Holdings 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 DIC Holdings Construction are associated (or correlated) with Ducgiang Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ducgiang Chemicals has no effect on the direction of DIC Holdings i.e., DIC Holdings and Ducgiang Chemicals go up and down completely randomly.

Pair Corralation between DIC Holdings and Ducgiang Chemicals

Assuming the 90 days trading horizon DIC Holdings Construction is expected to under-perform the Ducgiang Chemicals. In addition to that, DIC Holdings is 2.02 times more volatile than Ducgiang Chemicals Detergent. It trades about -0.01 of its total potential returns per unit of risk. Ducgiang Chemicals Detergent is currently generating about 0.09 per unit of volatility. If you would invest  5,877,125  in Ducgiang Chemicals Detergent on October 3, 2024 and sell it today you would earn a total of  5,782,875  from holding Ducgiang Chemicals Detergent or generate 98.4% return on investment over 90 days.

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

DIC Holdings Construction  vs.  Ducgiang Chemicals Detergent

DIC Holdings Construction

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DIC Holdings Construction are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, DIC Holdings displayed solid returns over the last few months and may actually be approaching a breakup point.

Ducgiang Chemicals

Risk-Adjusted Performance

4 of 100

Insignificant

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

Pair Trading with DIC Holdings and Ducgiang Chemicals

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

The idea behind DIC Holdings Construction and Ducgiang Chemicals Detergent 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.