Correlation Between De Grey and CDL INVESTMENT
Can any of the company-specific risk be diversified away by investing in both De Grey and CDL INVESTMENT 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 De Grey and CDL INVESTMENT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between De Grey Mining and CDL INVESTMENT, you can compare the effects of market volatilities on De Grey and CDL INVESTMENT 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 De Grey with a short position of CDL INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of De Grey and CDL INVESTMENT.
Diversification Opportunities for De Grey and CDL INVESTMENT
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between DGD and CDL is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding De Grey Mining and CDL INVESTMENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDL INVESTMENT and De Grey 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 De Grey Mining are associated (or correlated) with CDL INVESTMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CDL INVESTMENT has no effect on the direction of De Grey i.e., De Grey and CDL INVESTMENT go up and down completely randomly.
Pair Corralation between De Grey and CDL INVESTMENT
Assuming the 90 days trading horizon De Grey Mining is expected to generate 0.66 times more return on investment than CDL INVESTMENT. However, De Grey Mining is 1.51 times less risky than CDL INVESTMENT. It trades about 0.53 of its potential returns per unit of risk. CDL INVESTMENT is currently generating about -0.11 per unit of risk. If you would invest 104.00 in De Grey Mining on October 25, 2024 and sell it today you would earn a total of 15.00 from holding De Grey Mining or generate 14.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
De Grey Mining vs. CDL INVESTMENT
Performance |
| Timeline |
| De Grey Mining |
| CDL INVESTMENT |
De Grey and CDL INVESTMENT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with De Grey and CDL INVESTMENT
The main advantage of trading using opposite De Grey and CDL INVESTMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if De Grey position performs unexpectedly, CDL INVESTMENT 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 CDL INVESTMENT will offset losses from the drop in CDL INVESTMENT's long position.| De Grey vs. VIENNA INSURANCE GR | De Grey vs. Japan Post Insurance | De Grey vs. Safety Insurance Group | De Grey vs. UNIQA INSURANCE GR |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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