Correlation Between DLH Holdings and Aqua Metals
Can any of the company-specific risk be diversified away by investing in both DLH Holdings and Aqua Metals 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 DLH Holdings and Aqua Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DLH Holdings Corp and Aqua Metals, you can compare the effects of market volatilities on DLH Holdings and Aqua Metals 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 DLH Holdings with a short position of Aqua Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of DLH Holdings and Aqua Metals.
Diversification Opportunities for DLH Holdings and Aqua Metals
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DLH and Aqua is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding DLH Holdings Corp and Aqua Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqua Metals and DLH Holdings 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 DLH Holdings Corp are associated (or correlated) with Aqua Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqua Metals has no effect on the direction of DLH Holdings i.e., DLH Holdings and Aqua Metals go up and down completely randomly.
Pair Corralation between DLH Holdings and Aqua Metals
Given the investment horizon of 90 days DLH Holdings Corp is expected to generate 0.38 times more return on investment than Aqua Metals. However, DLH Holdings Corp is 2.65 times less risky than Aqua Metals. It trades about -0.07 of its potential returns per unit of risk. Aqua Metals is currently generating about -0.1 per unit of risk. If you would invest 1,148 in DLH Holdings Corp on August 31, 2024 and sell it today you would lose (285.00) from holding DLH Holdings Corp or give up 24.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DLH Holdings Corp vs. Aqua Metals
Performance |
| Timeline |
| DLH Holdings Corp |
| Aqua Metals |
DLH Holdings and Aqua Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DLH Holdings and Aqua Metals
The main advantage of trading using opposite DLH Holdings and Aqua Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DLH Holdings position performs unexpectedly, Aqua Metals 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 Aqua Metals will offset losses from the drop in Aqua Metals' long position.| DLH Holdings vs. Network 1 Technologies | DLH Holdings vs. Wilhelmina | DLH Holdings vs. Mader Group Limited | DLH Holdings vs. First Advantage Corp |
| Aqua Metals vs. LanzaTech Global | Aqua Metals vs. Waste Management | Aqua Metals vs. Clean Harbors | Aqua Metals vs. Casella Waste Systems |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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