Correlation Between Automata and Dusk Network

Can any of the company-specific risk be diversified away by investing in both Automata and Dusk Network 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 Automata and Dusk Network into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Automata and Dusk Network, you can compare the effects of market volatilities on Automata and Dusk Network 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 Automata with a short position of Dusk Network. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automata and Dusk Network.

Diversification Opportunities for Automata and Dusk Network

0.44

Correlation Coefficient

Automata  Dusk Network

Very weak diversification

The 3 months correlation between Automata and Dusk is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Automata and Dusk Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dusk Network and Automata 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 Automata are associated (or correlated) with Dusk Network. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dusk Network has no effect on the direction of Automata i.e., Automata and Dusk Network go up and down completely randomly.

Pair Corralation between Automata and Dusk Network

Assuming the 90 days trading horizon Automata is expected to generate 1.75 times more return on investment than Dusk Network. However, Automata is 1.75 times more volatile than Dusk Network. It trades about 0.03 of its potential returns per unit of risk. Dusk Network is currently generating about -0.17 per unit of risk. If you would invest  22.00  in Automata on February 7, 2024 and sell it today you would lose (2.00) from holding Automata or give up 9.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Automata  vs.  Dusk Network

Automata

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Automata are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Automata exhibited solid returns over the last few months and may actually be approaching a breakup point.

Dusk Network

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dusk Network are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Dusk Network exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Automata and Dusk Network

The main advantage of trading using opposite Automata and Dusk Network positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automata position performs unexpectedly, Dusk Network 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 Dusk Network will offset losses from the drop in Dusk Network's long position.

The idea behind Automata and Dusk Network 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.