Correlation Between DMCC SPECIALITY and Digjam

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

By analyzing existing cross correlation between DMCC SPECIALITY CHEMICALS and Digjam Limited, you can compare the effects of market volatilities on DMCC SPECIALITY and Digjam 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 DMCC SPECIALITY with a short position of Digjam. Check out your portfolio center. Please also check ongoing floating volatility patterns of DMCC SPECIALITY and Digjam.

Diversification Opportunities for DMCC SPECIALITY and Digjam

0.54

Correlation Coefficient

DMCC SPECIALITY  Digjam

Very weak diversification

The 3 months correlation between DMCC and Digjam is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding DMCC SPECIALITY CHEMICALS and Digjam Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digjam Limited and DMCC SPECIALITY 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 DMCC SPECIALITY CHEMICALS are associated (or correlated) with Digjam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digjam Limited has no effect on the direction of DMCC SPECIALITY i.e., DMCC SPECIALITY and Digjam go up and down completely randomly.

Pair Corralation between DMCC SPECIALITY and Digjam

Assuming the 90 days trading horizon DMCC SPECIALITY CHEMICALS is expected to generate 0.92 times more return on investment than Digjam. However, DMCC SPECIALITY CHEMICALS is 1.08 times less risky than Digjam. It trades about -0.13 of its potential returns per unit of risk. Digjam Limited is currently generating about -0.25 per unit of risk. If you would invest  36,470  in DMCC SPECIALITY CHEMICALS on December 25, 2024 and sell it today you would lose (7,705) from holding DMCC SPECIALITY CHEMICALS or give up 21.13% of portfolio value over 90 days.

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

DMCC SPECIALITY CHEMICALS  vs.  Digjam Limited

DMCC SPECIALITY CHEMICALS

Risk-Adjusted Performance

Very Weak

Over the last 90 days DMCC SPECIALITY CHEMICALS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Digjam Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Digjam Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's primary indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with DMCC SPECIALITY and Digjam

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

The idea behind DMCC SPECIALITY CHEMICALS and Digjam Limited 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.