Correlation Between Dragonfly and Interflex

Can any of the company-specific risk be diversified away by investing in both Dragonfly and Interflex 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 Interflex 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 Interflex Co, you can compare the effects of market volatilities on Dragonfly and Interflex 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 Interflex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dragonfly and Interflex.

Diversification Opportunities for Dragonfly and Interflex

0.14

Correlation Coefficient

Dragonfly  Interflex

Average diversification

The 3 months correlation between Dragonfly and Interflex is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Dragonfly GF Co and Interflex Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Interflex 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 Interflex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Interflex has no effect on the direction of Dragonfly i.e., Dragonfly and Interflex go up and down completely randomly.

Pair Corralation between Dragonfly and Interflex

Assuming the 90 days trading horizon Dragonfly GF Co is expected to generate 3.37 times more return on investment than Interflex. However, Dragonfly is 3.37 times more volatile than Interflex Co. It trades about 0.05 of its potential returns per unit of risk. Interflex Co is currently generating about -0.05 per unit of risk. If you would invest  124,500  in Dragonfly GF Co on October 26, 2024 and sell it today you would earn a total of  8,600  from holding Dragonfly GF Co or generate 6.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	75.41%
Values	Daily Returns

Dragonfly GF Co  vs.  Interflex Co

Dragonfly GF

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dragonfly GF Co are ranked lower than 4 (%) 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.

Interflex

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Interflex Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Dragonfly and Interflex

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

The idea behind Dragonfly GF Co and Interflex 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.