Correlation Between Dear Cashmere and Trust Stamp
Can any of the company-specific risk be diversified away by investing in both Dear Cashmere and Trust Stamp 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 Dear Cashmere and Trust Stamp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dear Cashmere Holding and Trust Stamp, you can compare the effects of market volatilities on Dear Cashmere and Trust Stamp 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 Dear Cashmere with a short position of Trust Stamp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dear Cashmere and Trust Stamp.
Diversification Opportunities for Dear Cashmere and Trust Stamp
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Dear and Trust is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Dear Cashmere Holding and Trust Stamp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trust Stamp and Dear Cashmere 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 Dear Cashmere Holding are associated (or correlated) with Trust Stamp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trust Stamp has no effect on the direction of Dear Cashmere i.e., Dear Cashmere and Trust Stamp go up and down completely randomly.
Pair Corralation between Dear Cashmere and Trust Stamp
Given the investment horizon of 90 days Dear Cashmere Holding is expected to generate 2.2 times more return on investment than Trust Stamp. However, Dear Cashmere is 2.2 times more volatile than Trust Stamp. It trades about 0.12 of its potential returns per unit of risk. Trust Stamp is currently generating about -0.14 per unit of risk. If you would invest 4.81 in Dear Cashmere Holding on August 27, 2024 and sell it today you would earn a total of 13.19 from holding Dear Cashmere Holding or generate 274.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dear Cashmere Holding vs. Trust Stamp
Performance |
| Timeline |
| Dear Cashmere Holding |
| Trust Stamp |
Dear Cashmere and Trust Stamp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dear Cashmere and Trust Stamp
The main advantage of trading using opposite Dear Cashmere and Trust Stamp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dear Cashmere position performs unexpectedly, Trust Stamp 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 Trust Stamp will offset losses from the drop in Trust Stamp's long position.| Dear Cashmere vs. Salesforce | Dear Cashmere vs. SAP SE ADR | Dear Cashmere vs. ServiceNow | Dear Cashmere vs. Intuit Inc |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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