Correlation Between Sologenic and DIA
Can any of the company-specific risk be diversified away by investing in both Sologenic and DIA 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 Sologenic and DIA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sologenic and DIA, you can compare the effects of market volatilities on Sologenic and DIA 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 Sologenic with a short position of DIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sologenic and DIA.
Diversification Opportunities for Sologenic and DIA
Weak diversification
The 3 months correlation between Sologenic and DIA is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Sologenic and DIA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DIA and Sologenic 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 Sologenic are associated (or correlated) with DIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DIA has no effect on the direction of Sologenic i.e., Sologenic and DIA go up and down completely randomly.
Pair Corralation between Sologenic and DIA
Assuming the 90 days trading horizon Sologenic is expected to generate 3.6 times more return on investment than DIA. However, Sologenic is 3.6 times more volatile than DIA. It trades about 0.06 of its potential returns per unit of risk. DIA is currently generating about 0.04 per unit of risk. If you would invest 15.00 in Sologenic on November 28, 2024 and sell it today you would earn a total of 17.00 from holding Sologenic or generate 113.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sologenic vs. DIA
Performance |
| Timeline |
| Sologenic |
| DIA |
Sologenic and DIA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sologenic and DIA
The main advantage of trading using opposite Sologenic and DIA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sologenic position performs unexpectedly, DIA 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 DIA will offset losses from the drop in DIA's long position.The idea behind Sologenic and DIA 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.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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
Other Complementary Tools
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data |