Correlation Between IDJ FINANCIAL and DIC Holdings

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

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

Diversification Opportunities for IDJ FINANCIAL and DIC Holdings

0.66

Correlation Coefficient

IDJ FINANCIAL  DIC Holdings

Poor diversification

The 3 months correlation between IDJ and DIC is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding IDJ FINANCIAL 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 IDJ FINANCIAL 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 IDJ FINANCIAL 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 IDJ FINANCIAL i.e., IDJ FINANCIAL and DIC Holdings go up and down completely randomly.

Pair Corralation between IDJ FINANCIAL and DIC Holdings

Assuming the 90 days trading horizon IDJ FINANCIAL is expected to under-perform the DIC Holdings. But the stock apears to be less risky and, when comparing its historical volatility, IDJ FINANCIAL is 1.67 times less risky than DIC Holdings. The stock trades about -0.04 of its potential returns per unit of risk. The DIC Holdings Construction is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  1,165,979  in DIC Holdings Construction on November 20, 2024 and sell it today you would lose (50,979) from holding DIC Holdings Construction or give up 4.37% of portfolio value over 90 days.

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

IDJ FINANCIAL  vs.  DIC Holdings Construction

IDJ FINANCIAL

Risk-Adjusted Performance

Very Weak

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

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 IDJ FINANCIAL and DIC Holdings

The main advantage of trading using opposite IDJ FINANCIAL and DIC Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IDJ FINANCIAL 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 IDJ FINANCIAL 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.