Correlation Between Daol Investment and Hurum

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

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

Diversification Opportunities for Daol Investment and Hurum

0.1

Correlation Coefficient

Daol Investment  Hurum

Average diversification

The 3 months correlation between Daol and Hurum is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Daol Investment Securities and Hurum Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hurum and Daol Investment 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 Daol Investment Securities are associated (or correlated) with Hurum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hurum has no effect on the direction of Daol Investment i.e., Daol Investment and Hurum go up and down completely randomly.

Pair Corralation between Daol Investment and Hurum

Assuming the 90 days trading horizon Daol Investment Securities is expected to generate 1.58 times more return on investment than Hurum. However, Daol Investment is 1.58 times more volatile than Hurum Co. It trades about 0.04 of its potential returns per unit of risk. Hurum Co is currently generating about -0.02 per unit of risk. If you would invest  292,500  in Daol Investment Securities on October 23, 2024 and sell it today you would earn a total of  14,500  from holding Daol Investment Securities or generate 4.96% return on investment over 90 days.

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

Daol Investment Securities  vs.  Hurum Co

Daol Investment Secu

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Daol Investment Securities are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Daol Investment may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Hurum

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hurum Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Hurum is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Daol Investment and Hurum

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

The idea behind Daol Investment Securities and Hurum Co 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.