Correlation Between DKargo and Maker

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

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

Diversification Opportunities for DKargo and Maker

0.32

Correlation Coefficient

DKargo  Maker

Weak diversification

The 3 months correlation between DKargo and Maker is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding dKargo and Maker in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maker 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 Maker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maker has no effect on the direction of DKargo i.e., DKargo and Maker go up and down completely randomly.

Pair Corralation between DKargo and Maker

Assuming the 90 days trading horizon DKargo is expected to generate 6.14 times less return on investment than Maker. In addition to that, DKargo is 1.11 times more volatile than Maker. It trades about 0.02 of its total potential returns per unit of risk. Maker is currently generating about 0.13 per unit of volatility. If you would invest  128,326  in Maker on January 24, 2024 and sell it today you would earn a total of  183,895  from holding Maker or generate 143.3% return on investment over 90 days.

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

dKargo  vs.  Maker

dKargo

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in dKargo are ranked lower than 3 (%) 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.

Maker

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Maker are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Maker exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DKargo and Maker

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

The idea behind dKargo and Maker 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 AI Investment Finder module to use AI to screen and filter profitable investment opportunities.