Correlation Between Dragonfly and INNOX Advanced

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

Diversification Opportunities for Dragonfly and INNOX Advanced

-0.19

Correlation Coefficient

Dragonfly  INNOX Advanced

Good diversification

The 3 months correlation between Dragonfly and INNOX is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Dragonfly GF Co and INNOX Advanced Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INNOX Advanced Materials 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 INNOX Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INNOX Advanced Materials has no effect on the direction of Dragonfly i.e., Dragonfly and INNOX Advanced go up and down completely randomly.

Pair Corralation between Dragonfly and INNOX Advanced

Assuming the 90 days trading horizon Dragonfly GF Co is expected to under-perform the INNOX Advanced. In addition to that, Dragonfly is 2.03 times more volatile than INNOX Advanced Materials. It trades about -0.04 of its total potential returns per unit of risk. INNOX Advanced Materials is currently generating about 0.1 per unit of volatility. If you would invest  2,040,000  in INNOX Advanced Materials on December 25, 2024 and sell it today you would earn a total of  355,000  from holding INNOX Advanced Materials or generate 17.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.25%
Values	Daily Returns

Dragonfly GF Co  vs.  INNOX Advanced Materials

Dragonfly GF

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dragonfly GF Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

INNOX Advanced Materials

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in INNOX Advanced Materials are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, INNOX Advanced sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dragonfly and INNOX Advanced

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

The idea behind Dragonfly GF Co and INNOX Advanced Materials 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.