Correlation Between Military Commercial and Damsan JSC

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

By analyzing existing cross correlation between Military Commercial Joint and Damsan JSC, you can compare the effects of market volatilities on Military Commercial and Damsan JSC 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 Military Commercial with a short position of Damsan JSC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Military Commercial and Damsan JSC.

Diversification Opportunities for Military Commercial and Damsan JSC

0.6

Correlation Coefficient

Military Commercial  Damsan JSC

Poor diversification

The 3 months correlation between Military and Damsan is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Military Commercial Joint and Damsan JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Damsan JSC and Military Commercial 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 Military Commercial Joint are associated (or correlated) with Damsan JSC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Damsan JSC has no effect on the direction of Military Commercial i.e., Military Commercial and Damsan JSC go up and down completely randomly.

Pair Corralation between Military Commercial and Damsan JSC

Assuming the 90 days trading horizon Military Commercial Joint is expected to generate 0.7 times more return on investment than Damsan JSC. However, Military Commercial Joint is 1.43 times less risky than Damsan JSC. It trades about 0.24 of its potential returns per unit of risk. Damsan JSC is currently generating about 0.05 per unit of risk. If you would invest  2,091,300  in Military Commercial Joint on December 21, 2024 and sell it today you would earn a total of  338,700  from holding Military Commercial Joint or generate 16.2% return on investment over 90 days.

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

Military Commercial Joint  vs.  Damsan JSC

Military Commercial Joint

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Military Commercial Joint are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental drivers, Military Commercial displayed solid returns over the last few months and may actually be approaching a breakup point.

Damsan JSC

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Damsan JSC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Damsan JSC is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Military Commercial and Damsan JSC

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

The idea behind Military Commercial Joint and Damsan JSC 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.