Correlation Between Dragonfly and Fine Besteel

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

Diversification Opportunities for Dragonfly and Fine Besteel

-0.4

Correlation Coefficient

Dragonfly  Fine Besteel

Very good diversification

The 3 months correlation between Dragonfly and Fine is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Dragonfly GF Co and Fine Besteel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fine Besteel 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 Fine Besteel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fine Besteel has no effect on the direction of Dragonfly i.e., Dragonfly and Fine Besteel go up and down completely randomly.

Pair Corralation between Dragonfly and Fine Besteel

Assuming the 90 days trading horizon Dragonfly GF Co is expected to generate 2.05 times more return on investment than Fine Besteel. However, Dragonfly is 2.05 times more volatile than Fine Besteel Co. It trades about 0.03 of its potential returns per unit of risk. Fine Besteel Co is currently generating about 0.02 per unit of risk. If you would invest  129,500  in Dragonfly GF Co on October 8, 2024 and sell it today you would lose (400.00) from holding Dragonfly GF Co or give up 0.31% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	75.41%
Values	Daily Returns

Dragonfly GF Co  vs.  Fine Besteel Co

Dragonfly GF

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dragonfly GF Co are ranked lower than 2 (%) 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.

Fine Besteel

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fine Besteel Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Fine Besteel 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 Fine Besteel

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

The idea behind Dragonfly GF Co and Fine Besteel 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 Stocks Directory module to find actively traded stocks across global markets.