Correlation Between EastGroup Properties and Diguang Intl

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

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

Diversification Opportunities for EastGroup Properties and Diguang Intl

0.55

Correlation Coefficient

EastGroup Properties  Diguang Intl

Very weak diversification

The 3 months correlation between EastGroup and Diguang is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding EastGroup Properties 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 EastGroup Properties 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 EastGroup Properties 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 EastGroup Properties i.e., EastGroup Properties and Diguang Intl go up and down completely randomly.

Pair Corralation between EastGroup Properties and Diguang Intl

Considering the 90-day investment horizon EastGroup Properties is expected to generate 0.13 times more return on investment than Diguang Intl. However, EastGroup Properties is 7.54 times less risky than Diguang Intl. It trades about -0.03 of its potential returns per unit of risk. Diguang Intl Dev is currently generating about -0.13 per unit of risk. If you would invest  17,495  in EastGroup Properties on October 26, 2024 and sell it today you would lose (524.00) from holding EastGroup Properties or give up 3.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

EastGroup Properties  vs.  Diguang Intl Dev

EastGroup Properties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EastGroup Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, EastGroup Properties is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Diguang Intl Dev

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Diguang Intl Dev 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 basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with EastGroup Properties and Diguang Intl

The main advantage of trading using opposite EastGroup Properties and Diguang Intl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EastGroup Properties 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 EastGroup Properties 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.