Correlation Between Computer Direct and Dan Hotels
Can any of the company-specific risk be diversified away by investing in both Computer Direct and Dan Hotels 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 Computer Direct and Dan Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Computer Direct and Dan Hotels, you can compare the effects of market volatilities on Computer Direct and Dan Hotels 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 Computer Direct with a short position of Dan Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Computer Direct and Dan Hotels.
Diversification Opportunities for Computer Direct and Dan Hotels
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Computer and Dan is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Computer Direct and Dan Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dan Hotels and Computer Direct 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 Computer Direct are associated (or correlated) with Dan Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dan Hotels has no effect on the direction of Computer Direct i.e., Computer Direct and Dan Hotels go up and down completely randomly.
Pair Corralation between Computer Direct and Dan Hotels
Assuming the 90 days trading horizon Computer Direct is expected to generate 2.11 times more return on investment than Dan Hotels. However, Computer Direct is 2.11 times more volatile than Dan Hotels. It trades about 0.59 of its potential returns per unit of risk. Dan Hotels is currently generating about -0.24 per unit of risk. If you would invest 2,767,000 in Computer Direct on August 25, 2024 and sell it today you would earn a total of 590,000 from holding Computer Direct or generate 21.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Computer Direct vs. Dan Hotels
Performance |
| Timeline |
| Computer Direct |
| Dan Hotels |
Computer Direct and Dan Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Computer Direct and Dan Hotels
The main advantage of trading using opposite Computer Direct and Dan Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Computer Direct position performs unexpectedly, Dan Hotels 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 Dan Hotels will offset losses from the drop in Dan Hotels' long position.| Computer Direct vs. Matrix | Computer Direct vs. Hilan | Computer Direct vs. One Software Technologies | Computer Direct vs. Atreyu Capital Markets |
| Dan Hotels vs. Harel Insurance Investments | Dan Hotels vs. Victory Supermarket Chain | Dan Hotels vs. Automatic Bank Services | Dan Hotels vs. First International 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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