Correlation Between DDMP REIT and STI Education

Can any of the company-specific risk be diversified away by investing in both DDMP REIT and STI Education 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 DDMP REIT and STI Education into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DDMP REIT and STI Education Systems, you can compare the effects of market volatilities on DDMP REIT and STI Education 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 DDMP REIT with a short position of STI Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of DDMP REIT and STI Education.

Diversification Opportunities for DDMP REIT and STI Education

0.11

Correlation Coefficient

DDMP REIT  STI Education

Average diversification

The 3 months correlation between DDMP and STI is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding DDMP REIT and STI Education Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STI Education Systems and DDMP REIT 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 DDMP REIT are associated (or correlated) with STI Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STI Education Systems has no effect on the direction of DDMP REIT i.e., DDMP REIT and STI Education go up and down completely randomly.

Pair Corralation between DDMP REIT and STI Education

Assuming the 90 days trading horizon DDMP REIT is expected to generate 1.77 times less return on investment than STI Education. But when comparing it to its historical volatility, DDMP REIT is 1.7 times less risky than STI Education. It trades about 0.08 of its potential returns per unit of risk. STI Education Systems is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  126.00  in STI Education Systems on September 25, 2024 and sell it today you would earn a total of  4.00  from holding STI Education Systems or generate 3.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

DDMP REIT  vs.  STI Education Systems

DDMP REIT

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in DDMP REIT are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable primary indicators, DDMP REIT is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

STI Education Systems

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in STI Education Systems are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, STI Education exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DDMP REIT and STI Education

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

The idea behind DDMP REIT and STI Education Systems 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.