Correlation Between Bill and DHI

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

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

Diversification Opportunities for Bill and DHI

0.14

Correlation Coefficient

Bill  DHI

Average diversification

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

Pair Corralation between Bill and DHI

Given the investment horizon of 90 days Bill Com Holdings is expected to under-perform the DHI. But the stock apears to be less risky and, when comparing its historical volatility, Bill Com Holdings is 1.76 times less risky than DHI. The stock trades about -0.16 of its potential returns per unit of risk. The DHI Group is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  173.00  in DHI Group on October 12, 2024 and sell it today you would earn a total of  45.00  from holding DHI Group or generate 26.01% return on investment over 90 days.

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

Bill Com Holdings  vs.  DHI Group

Bill Com Holdings

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bill Com Holdings are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile essential indicators, Bill disclosed solid returns over the last few months and may actually be approaching a breakup point.

DHI Group

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DHI Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal technical indicators, DHI showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bill and DHI

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

The idea behind Bill Com Holdings and DHI Group 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.