Correlation Between Aclara Resources and Dye Durham

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

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

Diversification Opportunities for Aclara Resources and Dye Durham

-0.76

Correlation Coefficient

Aclara Resources  Dye Durham

Pay attention - limited upside

The 3 months correlation between Aclara and Dye is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Aclara Resources and Dye Durham in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dye Durham and Aclara Resources 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 Aclara Resources are associated (or correlated) with Dye Durham. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dye Durham has no effect on the direction of Aclara Resources i.e., Aclara Resources and Dye Durham go up and down completely randomly.

Pair Corralation between Aclara Resources and Dye Durham

Assuming the 90 days trading horizon Aclara Resources is expected to under-perform the Dye Durham. But the stock apears to be less risky and, when comparing its historical volatility, Aclara Resources is 1.03 times less risky than Dye Durham. The stock trades about -0.04 of its potential returns per unit of risk. The Dye Durham is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  1,398  in Dye Durham on September 4, 2024 and sell it today you would earn a total of  669.00  from holding Dye Durham or generate 47.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Aclara Resources  vs.  Dye Durham

Aclara Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aclara Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Dye Durham

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dye Durham are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Dye Durham displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aclara Resources and Dye Durham

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

The idea behind Aclara Resources and Dye Durham 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.