Correlation Between DICKS Sporting and ADHI KARYA
Can any of the company-specific risk be diversified away by investing in both DICKS Sporting and ADHI KARYA 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 DICKS Sporting and ADHI KARYA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DICKS Sporting Goods and ADHI KARYA, you can compare the effects of market volatilities on DICKS Sporting and ADHI KARYA 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 DICKS Sporting with a short position of ADHI KARYA. Check out your portfolio center. Please also check ongoing floating volatility patterns of DICKS Sporting and ADHI KARYA.
Diversification Opportunities for DICKS Sporting and ADHI KARYA
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between DICKS and ADHI is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding DICKS Sporting Goods and ADHI KARYA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADHI KARYA and DICKS Sporting 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 DICKS Sporting Goods are associated (or correlated) with ADHI KARYA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADHI KARYA has no effect on the direction of DICKS Sporting i.e., DICKS Sporting and ADHI KARYA go up and down completely randomly.
Pair Corralation between DICKS Sporting and ADHI KARYA
Assuming the 90 days horizon DICKS Sporting is expected to generate 39.89 times less return on investment than ADHI KARYA. But when comparing it to its historical volatility, DICKS Sporting Goods is 27.94 times less risky than ADHI KARYA. It trades about 0.05 of its potential returns per unit of risk. ADHI KARYA is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2.20 in ADHI KARYA on December 2, 2024 and sell it today you would lose (1.60) from holding ADHI KARYA or give up 72.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DICKS Sporting Goods vs. ADHI KARYA
Performance |
| Timeline |
| DICKS Sporting Goods |
| ADHI KARYA |
DICKS Sporting and ADHI KARYA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DICKS Sporting and ADHI KARYA
The main advantage of trading using opposite DICKS Sporting and ADHI KARYA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DICKS Sporting position performs unexpectedly, ADHI KARYA 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 ADHI KARYA will offset losses from the drop in ADHI KARYA's long position.| DICKS Sporting vs. Television Broadcasts Limited | ||
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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