Correlation Between Moulinvest and DNXcorp

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

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

Diversification Opportunities for Moulinvest and DNXcorp

0.63

Correlation Coefficient

Moulinvest  DNXcorp

Poor diversification

The 3 months correlation between Moulinvest and DNXcorp is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Moulinvest and DNXcorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DNXcorp and Moulinvest 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 Moulinvest are associated (or correlated) with DNXcorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DNXcorp has no effect on the direction of Moulinvest i.e., Moulinvest and DNXcorp go up and down completely randomly.

Pair Corralation between Moulinvest and DNXcorp

Assuming the 90 days trading horizon Moulinvest is expected to generate 1.45 times more return on investment than DNXcorp. However, Moulinvest is 1.45 times more volatile than DNXcorp. It trades about 0.24 of its potential returns per unit of risk. DNXcorp is currently generating about 0.1 per unit of risk. If you would invest  1,098  in Moulinvest on December 5, 2024 and sell it today you would earn a total of  462.00  from holding Moulinvest or generate 42.08% return on investment over 90 days.

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

Moulinvest  vs.  DNXcorp

Moulinvest

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Moulinvest are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Moulinvest reported solid returns over the last few months and may actually be approaching a breakup point.

DNXcorp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DNXcorp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, DNXcorp may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Moulinvest and DNXcorp

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

The idea behind Moulinvest and DNXcorp 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 Transaction History module to view history of all your transactions and understand their impact on performance.