Correlation Between Integrated Media and Deswell Industries

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

By analyzing existing cross correlation between Integrated Media Technology and Deswell Industries, you can compare the effects of market volatilities on Integrated Media and Deswell Industries 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 Integrated Media with a short position of Deswell Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Integrated Media and Deswell Industries.

Diversification Opportunities for Integrated Media and Deswell Industries

-0.15

Correlation Coefficient

Integrated Media  Deswell Industries

Good diversification

The 3 months correlation between Integrated and Deswell is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Integrated Media Technology and Deswell Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deswell Industries and Integrated Media 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 Integrated Media Technology are associated (or correlated) with Deswell Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deswell Industries has no effect on the direction of Integrated Media i.e., Integrated Media and Deswell Industries go up and down completely randomly.

Pair Corralation between Integrated Media and Deswell Industries

Given the investment horizon of 90 days Integrated Media Technology is expected to under-perform the Deswell Industries. In addition to that, Integrated Media is 3.15 times more volatile than Deswell Industries. It trades about -0.01 of its total potential returns per unit of risk. Deswell Industries is currently generating about 0.15 per unit of volatility. If you would invest  228.00  in Deswell Industries on September 3, 2024 and sell it today you would earn a total of  44.00  from holding Deswell Industries or generate 19.3% return on investment over 90 days.

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

Integrated Media Technology  vs.  Deswell Industries

Integrated Media Tec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Integrated Media Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Integrated Media is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Deswell Industries

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Deswell Industries are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, Deswell Industries disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Integrated Media and Deswell Industries

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

The idea behind Integrated Media Technology and Deswell Industries 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.