Correlation Between True USD and DKargo

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

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

Diversification Opportunities for True USD and DKargo

0.3

Correlation Coefficient

True USD  DKargo

Weak diversification

The 3 months correlation between True and DKargo is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding True USD and dKargo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on dKargo and True USD 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 True USD are associated (or correlated) with DKargo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of dKargo has no effect on the direction of True USD i.e., True USD and DKargo go up and down completely randomly.

Pair Corralation between True USD and DKargo

Assuming the 90 days trading horizon True USD is expected to generate 90.67 times less return on investment than DKargo. But when comparing it to its historical volatility, True USD is 15.94 times less risky than DKargo. It trades about 0.0 of its potential returns per unit of risk. dKargo is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  5.13  in dKargo on February 6, 2024 and sell it today you would lose (2.13) from holding dKargo or give up 41.52% of portfolio value over 90 days.

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

True USD  vs.  dKargo

True USD

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in True USD are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, True USD is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

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.

Pair Trading with True USD and DKargo

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

The idea behind True USD and dKargo 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.