Correlation Between Din Capital and Bich Chi

Can any of the company-specific risk be diversified away by investing in both Din Capital and Bich Chi 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 Din Capital and Bich Chi into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Din Capital Investment and Bich Chi Food, you can compare the effects of market volatilities on Din Capital and Bich Chi 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 Din Capital with a short position of Bich Chi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Din Capital and Bich Chi.

Diversification Opportunities for Din Capital and Bich Chi

0.59

Correlation Coefficient

Din Capital  Bich Chi

Very weak diversification

The 3 months correlation between Din and Bich is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Din Capital Investment and Bich Chi Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bich Chi Food and Din Capital 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 Din Capital Investment are associated (or correlated) with Bich Chi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bich Chi Food has no effect on the direction of Din Capital i.e., Din Capital and Bich Chi go up and down completely randomly.

Pair Corralation between Din Capital and Bich Chi

Assuming the 90 days trading horizon Din Capital Investment is expected to generate 0.55 times more return on investment than Bich Chi. However, Din Capital Investment is 1.83 times less risky than Bich Chi. It trades about 0.12 of its potential returns per unit of risk. Bich Chi Food is currently generating about 0.06 per unit of risk. If you would invest  910,000  in Din Capital Investment on September 15, 2024 and sell it today you would earn a total of  110,000  from holding Din Capital Investment or generate 12.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	63.33%
Values	Daily Returns

Din Capital Investment  vs.  Bich Chi Food

Din Capital Investment

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Din Capital Investment are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental drivers, Din Capital displayed solid returns over the last few months and may actually be approaching a breakup point.

Bich Chi Food

Risk-Adjusted Performance

4 of 100

Insignificant

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

Pair Trading with Din Capital and Bich Chi

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

The idea behind Din Capital Investment and Bich Chi Food 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.