Correlation Between DKargo and Audius

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

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

Diversification Opportunities for DKargo and Audius

0.94

Correlation Coefficient

DKargo  Audius

Almost no diversification

The 3 months correlation between DKargo and Audius is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding dKargo and Audius in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Audius and DKargo 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 dKargo are associated (or correlated) with Audius. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Audius has no effect on the direction of DKargo i.e., DKargo and Audius go up and down completely randomly.

Pair Corralation between DKargo and Audius

Assuming the 90 days trading horizon dKargo is expected to generate 0.87 times more return on investment than Audius. However, dKargo is 1.15 times less risky than Audius. It trades about 0.01 of its potential returns per unit of risk. Audius is currently generating about 0.0 per unit of risk. If you would invest  3.55  in dKargo on February 7, 2024 and sell it today you would lose (0.55) from holding dKargo or give up 15.49% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

dKargo  vs.  Audius

dKargo

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in dKargo are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, DKargo may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Audius

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Audius are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Audius may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with DKargo and Audius

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

The idea behind dKargo and Audius 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.