Correlation Between Dragonfly and ABOV Semiconductor
Can any of the company-specific risk be diversified away by investing in both Dragonfly and ABOV Semiconductor 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 ABOV Semiconductor 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 ABOV Semiconductor Co, you can compare the effects of market volatilities on Dragonfly and ABOV Semiconductor 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 ABOV Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dragonfly and ABOV Semiconductor.
Diversification Opportunities for Dragonfly and ABOV Semiconductor
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dragonfly and ABOV is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Dragonfly GF Co and ABOV Semiconductor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABOV Semiconductor 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 ABOV Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABOV Semiconductor has no effect on the direction of Dragonfly i.e., Dragonfly and ABOV Semiconductor go up and down completely randomly.
Pair Corralation between Dragonfly and ABOV Semiconductor
Assuming the 90 days trading horizon Dragonfly GF Co is expected to under-perform the ABOV Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, Dragonfly GF Co is 1.06 times less risky than ABOV Semiconductor. The stock trades about -0.05 of its potential returns per unit of risk. The ABOV Semiconductor Co is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 966,933 in ABOV Semiconductor Co on August 31, 2024 and sell it today you would lose (158,933) from holding ABOV Semiconductor Co or give up 16.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 96.34% |
| Values | Daily Returns |
Dragonfly GF Co vs. ABOV Semiconductor Co
Performance |
| Timeline |
| Dragonfly GF |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| ABOV Semiconductor |
Dragonfly and ABOV Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dragonfly and ABOV Semiconductor
The main advantage of trading using opposite Dragonfly and ABOV Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dragonfly position performs unexpectedly, ABOV Semiconductor 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 ABOV Semiconductor will offset losses from the drop in ABOV Semiconductor's long position.| Dragonfly vs. Samsung Electronics Co | Dragonfly vs. Samsung Electronics Co | Dragonfly vs. LG Energy Solution | Dragonfly vs. SK Hynix |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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