Correlation Between Dmc Global and Cactus

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

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

Diversification Opportunities for Dmc Global and Cactus

-0.36

Correlation Coefficient

Dmc Global  Cactus

Very good diversification

The 3 months correlation between Dmc and Cactus is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Dmc Global and Cactus Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cactus Inc and Dmc Global 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 Dmc Global are associated (or correlated) with Cactus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cactus Inc has no effect on the direction of Dmc Global i.e., Dmc Global and Cactus go up and down completely randomly.

Pair Corralation between Dmc Global and Cactus

Given the investment horizon of 90 days Dmc Global is expected to generate 1.7 times more return on investment than Cactus. However, Dmc Global is 1.7 times more volatile than Cactus Inc. It trades about -0.12 of its potential returns per unit of risk. Cactus Inc is currently generating about -0.55 per unit of risk. If you would invest  740.00  in Dmc Global on September 23, 2024 and sell it today you would lose (56.00) from holding Dmc Global or give up 7.57% of portfolio value over 90 days.

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

Dmc Global  vs.  Cactus Inc

Dmc Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dmc Global has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Cactus Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cactus Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's technical indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Dmc Global and Cactus

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

The idea behind Dmc Global and Cactus Inc 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.