Correlation Between Dragonfly and Signetics
Can any of the company-specific risk be diversified away by investing in both Dragonfly and Signetics 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 Dragonfly and Signetics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dragonfly GF Co and Signetics, you can compare the effects of market volatilities on Dragonfly and Signetics 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 Dragonfly with a short position of Signetics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dragonfly and Signetics.
Diversification Opportunities for Dragonfly and Signetics
Poor diversification
The 3 months correlation between Dragonfly and Signetics is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Dragonfly GF Co and Signetics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Signetics and Dragonfly 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 Dragonfly GF Co are associated (or correlated) with Signetics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Signetics has no effect on the direction of Dragonfly i.e., Dragonfly and Signetics go up and down completely randomly.
Pair Corralation between Dragonfly and Signetics
Assuming the 90 days trading horizon Dragonfly GF Co is expected to under-perform the Signetics. But the stock apears to be less risky and, when comparing its historical volatility, Dragonfly GF Co is 1.65 times less risky than Signetics. The stock trades about -1.06 of its potential returns per unit of risk. The Signetics is currently generating about -0.55 of returns per unit of risk over similar time horizon. If you would invest 98,000 in Signetics on September 3, 2024 and sell it today you would lose (20,700) from holding Signetics or give up 21.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 28.57% |
| Values | Daily Returns |
Dragonfly GF Co vs. Signetics
Performance |
| Timeline |
| Dragonfly GF |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Signetics |
Dragonfly and Signetics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dragonfly and Signetics
The main advantage of trading using opposite Dragonfly and Signetics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dragonfly position performs unexpectedly, Signetics 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 Signetics will offset losses from the drop in Signetics' long position.| Dragonfly vs. Samsung Electronics Co | Dragonfly vs. Samsung Electronics Co | Dragonfly vs. LG Energy Solution | Dragonfly vs. SK Hynix |
| Signetics vs. Dongsin Engineering Construction | Signetics vs. Doosan Fuel Cell | Signetics vs. Daishin Balance 1 | Signetics vs. Total Soft Bank |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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