Correlation Between Dragonfly and TJ Media

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

By analyzing existing cross correlation between Dragonfly GF Co and TJ media Co, you can compare the effects of market volatilities on Dragonfly and TJ Media 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 Dragonfly with a short position of TJ Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dragonfly and TJ Media.

Diversification Opportunities for Dragonfly and TJ Media

0.33

Correlation Coefficient

Dragonfly  TJ Media

Weak diversification

The 3 months correlation between Dragonfly and 032540 is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Dragonfly GF Co and TJ media Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TJ media and Dragonfly 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 Dragonfly GF Co are associated (or correlated) with TJ Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TJ media has no effect on the direction of Dragonfly i.e., Dragonfly and TJ Media go up and down completely randomly.

Pair Corralation between Dragonfly and TJ Media

Assuming the 90 days trading horizon Dragonfly GF Co is expected to generate 6.34 times more return on investment than TJ Media. However, Dragonfly is 6.34 times more volatile than TJ media Co. It trades about 0.07 of its potential returns per unit of risk. TJ media Co is currently generating about 0.02 per unit of risk. If you would invest  119,000  in Dragonfly GF Co on October 22, 2024 and sell it today you would earn a total of  15,900  from holding Dragonfly GF Co or generate 13.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	75.81%
Values	Daily Returns

Dragonfly GF Co  vs.  TJ media Co

Dragonfly GF

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Dragonfly GF Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Dragonfly sustained solid returns over the last few months and may actually be approaching a breakup point.

TJ media

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in TJ media Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, TJ Media is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dragonfly and TJ Media

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

The idea behind Dragonfly GF Co and TJ media 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.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.