Correlation Between YH Dimri and First International

Can any of the company-specific risk be diversified away by investing in both YH Dimri and First International 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 YH Dimri and First International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between YH Dimri Construction and First International Bank, you can compare the effects of market volatilities on YH Dimri and First International 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 YH Dimri with a short position of First International. Check out your portfolio center. Please also check ongoing floating volatility patterns of YH Dimri and First International.

Diversification Opportunities for YH Dimri and First International

0.88

Correlation Coefficient

YH Dimri  First International

Very poor diversification

The 3 months correlation between DIMRI and First is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding YH Dimri Construction and First International Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First International Bank and YH Dimri 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 YH Dimri Construction are associated (or correlated) with First International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First International Bank has no effect on the direction of YH Dimri i.e., YH Dimri and First International go up and down completely randomly.

Pair Corralation between YH Dimri and First International

Assuming the 90 days trading horizon YH Dimri is expected to generate 1.64 times less return on investment than First International. In addition to that, YH Dimri is 1.25 times more volatile than First International Bank. It trades about 0.17 of its total potential returns per unit of risk. First International Bank is currently generating about 0.35 per unit of volatility. If you would invest  1,459,095  in First International Bank on September 14, 2024 and sell it today you would earn a total of  338,905  from holding First International Bank or generate 23.23% return on investment over 90 days.

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

YH Dimri Construction  vs.  First International Bank

YH Dimri Construction

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in YH Dimri Construction are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, YH Dimri unveiled solid returns over the last few months and may actually be approaching a breakup point.

First International Bank

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in First International Bank are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, First International sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with YH Dimri and First International

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

The idea behind YH Dimri Construction and First International Bank 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.