Correlation Between DKargo and HYN

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

Diversification Opportunities for DKargo and HYN

-0.64
  Correlation Coefficient

Excellent diversification

The 3 months correlation between DKargo and HYN is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding dKargo and HYN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HYN 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 HYN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HYN has no effect on the direction of DKargo i.e., DKargo and HYN go up and down completely randomly.

Pair Corralation between DKargo and HYN

If you would invest  3.64  in dKargo on December 29, 2023 and sell it today you would earn a total of  0.18  from holding dKargo or generate 4.95% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy4.55%
ValuesDaily Returns

dKargo  vs.  HYN

 Performance 
       Timeline  
dKargo 

Risk-Adjusted Performance

4 of 100

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

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days HYN has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, HYN is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

DKargo and HYN Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with DKargo and HYN

The main advantage of trading using opposite DKargo and HYN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DKargo position performs unexpectedly, HYN 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 HYN will offset losses from the drop in HYN's long position.
The idea behind dKargo and HYN 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.

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