Correlation Between DSS and KAR Auction
Can any of the company-specific risk be diversified away by investing in both DSS and KAR Auction 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 DSS and KAR Auction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DSS Inc and KAR Auction Services, you can compare the effects of market volatilities on DSS and KAR Auction 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 DSS with a short position of KAR Auction. Check out your portfolio center. Please also check ongoing floating volatility patterns of DSS and KAR Auction.
Diversification Opportunities for DSS and KAR Auction
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between DSS and KAR is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding DSS Inc and KAR Auction Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KAR Auction Services and DSS 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 DSS Inc are associated (or correlated) with KAR Auction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KAR Auction Services has no effect on the direction of DSS i.e., DSS and KAR Auction go up and down completely randomly.
Pair Corralation between DSS and KAR Auction
Considering the 90-day investment horizon DSS Inc is expected to under-perform the KAR Auction. In addition to that, DSS is 1.16 times more volatile than KAR Auction Services. It trades about -0.33 of its total potential returns per unit of risk. KAR Auction Services is currently generating about 0.33 per unit of volatility. If you would invest 1,641 in KAR Auction Services on August 27, 2024 and sell it today you would earn a total of 379.00 from holding KAR Auction Services or generate 23.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DSS Inc vs. KAR Auction Services
Performance |
| Timeline |
| DSS Inc |
| KAR Auction Services |
DSS and KAR Auction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DSS and KAR Auction
The main advantage of trading using opposite DSS and KAR Auction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DSS position performs unexpectedly, KAR Auction 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 KAR Auction will offset losses from the drop in KAR Auction's long position.The idea behind DSS Inc and KAR Auction Services pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| KAR Auction vs. Bassett Furniture Industries | KAR Auction vs. Hooker Furniture | KAR Auction vs. Natuzzi SpA | KAR Auction vs. Flexsteel Industries |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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