Correlation Between 1369 Construction and DIC Holdings

Can any of the company-specific risk be diversified away by investing in both 1369 Construction and DIC Holdings 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 1369 Construction and DIC Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 1369 Construction JSC and DIC Holdings Construction, you can compare the effects of market volatilities on 1369 Construction and DIC Holdings 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 1369 Construction with a short position of DIC Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of 1369 Construction and DIC Holdings.

Diversification Opportunities for 1369 Construction and DIC Holdings

-0.89

Correlation Coefficient

1369 Construction  DIC Holdings

Pay attention - limited upside

The 3 months correlation between 1369 and DIC is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding 1369 Construction JSC and DIC Holdings Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DIC Holdings Construction and 1369 Construction 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 1369 Construction JSC are associated (or correlated) with DIC Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DIC Holdings Construction has no effect on the direction of 1369 Construction i.e., 1369 Construction and DIC Holdings go up and down completely randomly.

Pair Corralation between 1369 Construction and DIC Holdings

Assuming the 90 days trading horizon 1369 Construction JSC is expected to generate 0.71 times more return on investment than DIC Holdings. However, 1369 Construction JSC is 1.42 times less risky than DIC Holdings. It trades about 0.0 of its potential returns per unit of risk. DIC Holdings Construction is currently generating about -0.01 per unit of risk. If you would invest  770,000  in 1369 Construction JSC on October 3, 2024 and sell it today you would lose (130,000) from holding 1369 Construction JSC or give up 16.88% of portfolio value over 90 days.

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

1369 Construction JSC  vs.  DIC Holdings Construction

1369 Construction JSC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 1369 Construction JSC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

DIC Holdings Construction

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DIC Holdings Construction are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, DIC Holdings displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with 1369 Construction and DIC Holdings

The main advantage of trading using opposite 1369 Construction and DIC Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 1369 Construction position performs unexpectedly, DIC Holdings 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 DIC Holdings will offset losses from the drop in DIC Holdings' long position.

The idea behind 1369 Construction JSC and DIC Holdings Construction 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.

Check out your portfolio center.

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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.