Correlation Between WA Kaolin and Dicker Data

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Can any of the company-specific risk be diversified away by investing in both WA Kaolin and Dicker Data 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 WA Kaolin and Dicker Data into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WA Kaolin and Dicker Data, you can compare the effects of market volatilities on WA Kaolin and Dicker Data 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 WA Kaolin with a short position of Dicker Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of WA Kaolin and Dicker Data.

Diversification Opportunities for WA Kaolin and Dicker Data

-0.55
  Correlation Coefficient

Excellent diversification

The 3 months correlation between WAK and Dicker is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding WA Kaolin and Dicker Data in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dicker Data and WA Kaolin 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 WA Kaolin are associated (or correlated) with Dicker Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dicker Data has no effect on the direction of WA Kaolin i.e., WA Kaolin and Dicker Data go up and down completely randomly.

Pair Corralation between WA Kaolin and Dicker Data

Assuming the 90 days trading horizon WA Kaolin is expected to under-perform the Dicker Data. In addition to that, WA Kaolin is 2.29 times more volatile than Dicker Data. It trades about -0.03 of its total potential returns per unit of risk. Dicker Data is currently generating about 0.03 per unit of volatility. If you would invest  740.00  in Dicker Data on September 12, 2024 and sell it today you would earn a total of  99.00  from holding Dicker Data or generate 13.38% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

WA Kaolin  vs.  Dicker Data

 Performance 
       Timeline  
WA Kaolin 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in WA Kaolin are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward-looking signals, WA Kaolin unveiled solid returns over the last few months and may actually be approaching a breakup point.
Dicker Data 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Dicker Data has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Dicker Data is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

WA Kaolin and Dicker Data Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with WA Kaolin and Dicker Data

The main advantage of trading using opposite WA Kaolin and Dicker Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WA Kaolin position performs unexpectedly, Dicker Data 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 Dicker Data will offset losses from the drop in Dicker Data's long position.
The idea behind WA Kaolin and Dicker Data 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.
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.

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