Correlation Between THRACE PLASTICS and Digital Realty

Can any of the company-specific risk be diversified away by investing in both THRACE PLASTICS and Digital Realty 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 THRACE PLASTICS and Digital Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between THRACE PLASTICS and Digital Realty Trust, you can compare the effects of market volatilities on THRACE PLASTICS and Digital Realty 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 THRACE PLASTICS with a short position of Digital Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of THRACE PLASTICS and Digital Realty.

Diversification Opportunities for THRACE PLASTICS and Digital Realty

0.71

Correlation Coefficient

THRACE PLASTICS  Digital Realty

Poor diversification

The 3 months correlation between THRACE and Digital is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding THRACE PLASTICS and Digital Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital Realty Trust and THRACE PLASTICS 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 THRACE PLASTICS are associated (or correlated) with Digital Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital Realty Trust has no effect on the direction of THRACE PLASTICS i.e., THRACE PLASTICS and Digital Realty go up and down completely randomly.

Pair Corralation between THRACE PLASTICS and Digital Realty

Assuming the 90 days trading horizon THRACE PLASTICS is expected to generate 0.88 times more return on investment than Digital Realty. However, THRACE PLASTICS is 1.14 times less risky than Digital Realty. It trades about 0.0 of its potential returns per unit of risk. Digital Realty Trust is currently generating about -0.35 per unit of risk. If you would invest  394.00  in THRACE PLASTICS on October 5, 2024 and sell it today you would earn a total of  0.00  from holding THRACE PLASTICS or generate 0.0% return on investment over 90 days.

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

THRACE PLASTICS  vs.  Digital Realty Trust

THRACE PLASTICS

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days THRACE PLASTICS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather uncertain basic indicators, THRACE PLASTICS may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Digital Realty Trust

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Digital Realty Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, Digital Realty reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with THRACE PLASTICS and Digital Realty

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

The idea behind THRACE PLASTICS and Digital Realty Trust 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.

Check out your portfolio center.

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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.