Correlation Between Telecoms Informatics and DIC Holdings

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

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

Diversification Opportunities for Telecoms Informatics and DIC Holdings

-0.49

Correlation Coefficient

Telecoms Informatics  DIC Holdings

Very good diversification

The 3 months correlation between Telecoms and DIC is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Telecoms Informatics JSC and DIC Holdings Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DIC Holdings Construction and Telecoms Informatics 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 Telecoms Informatics JSC are associated (or correlated) with DIC Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DIC Holdings Construction has no effect on the direction of Telecoms Informatics i.e., Telecoms Informatics and DIC Holdings go up and down completely randomly.

Pair Corralation between Telecoms Informatics and DIC Holdings

Assuming the 90 days trading horizon Telecoms Informatics JSC is expected to generate 0.71 times more return on investment than DIC Holdings. However, Telecoms Informatics JSC is 1.42 times less risky than DIC Holdings. It trades about 0.05 of its potential returns per unit of risk. DIC Holdings Construction is currently generating about -0.03 per unit of risk. If you would invest  1,310,000  in Telecoms Informatics JSC on December 5, 2024 and sell it today you would earn a total of  65,000  from holding Telecoms Informatics JSC or generate 4.96% return on investment over 90 days.

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

Telecoms Informatics JSC  vs.  DIC Holdings Construction

Telecoms Informatics JSC

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Telecoms Informatics JSC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Telecoms Informatics may actually be approaching a critical reversion point that can send shares even higher in April 2025.

DIC Holdings Construction

Risk-Adjusted Performance

Very Weak

Over the last 90 days DIC Holdings Construction has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, DIC Holdings is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Telecoms Informatics and DIC Holdings

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

The idea behind Telecoms Informatics JSC and DIC Holdings Construction 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.