Correlation Between Deswell Industries and Core Molding
Can any of the company-specific risk be diversified away by investing in both Deswell Industries and Core Molding 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 Deswell Industries and Core Molding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deswell Industries and Core Molding Technologies, you can compare the effects of market volatilities on Deswell Industries and Core Molding 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 Deswell Industries with a short position of Core Molding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deswell Industries and Core Molding.
Diversification Opportunities for Deswell Industries and Core Molding
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Deswell and Core is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Deswell Industries and Core Molding Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Core Molding Technologies and Deswell Industries 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 Deswell Industries are associated (or correlated) with Core Molding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Core Molding Technologies has no effect on the direction of Deswell Industries i.e., Deswell Industries and Core Molding go up and down completely randomly.
Pair Corralation between Deswell Industries and Core Molding
Given the investment horizon of 90 days Deswell Industries is expected to generate 0.54 times more return on investment than Core Molding. However, Deswell Industries is 1.84 times less risky than Core Molding. It trades about 0.11 of its potential returns per unit of risk. Core Molding Technologies is currently generating about -0.05 per unit of risk. If you would invest 223.00 in Deswell Industries on March 12, 2024 and sell it today you would earn a total of 26.00 from holding Deswell Industries or generate 11.66% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Deswell Industries vs. Core Molding Technologies
Performance |
Timeline |
Deswell Industries |
Core Molding Technologies |
Deswell Industries and Core Molding Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Deswell Industries and Core Molding
The main advantage of trading using opposite Deswell Industries and Core Molding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deswell Industries position performs unexpectedly, Core Molding 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 Core Molding will offset losses from the drop in Core Molding's long position.Deswell Industries vs. Ieh Corp | Deswell Industries vs. LGL Group | Deswell Industries vs. Micropac Industries | Deswell Industries vs. SigmaTron International |
Core Molding vs. H B Fuller | Core Molding vs. Element Solutions | Core Molding vs. Innospec | Core Molding vs. Cabot |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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