Correlation Between COL Financial and DoubleDragon Properties

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

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

Diversification Opportunities for COL Financial and DoubleDragon Properties

-0.15

Correlation Coefficient

COL Financial  DoubleDragon Properties

Good diversification

The 3 months correlation between COL and DoubleDragon is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding COL Financial Group and DoubleDragon Properties Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DoubleDragon Properties and COL Financial 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 COL Financial Group are associated (or correlated) with DoubleDragon Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DoubleDragon Properties has no effect on the direction of COL Financial i.e., COL Financial and DoubleDragon Properties go up and down completely randomly.

Pair Corralation between COL Financial and DoubleDragon Properties

Assuming the 90 days trading horizon COL Financial Group is expected to generate 2.07 times more return on investment than DoubleDragon Properties. However, COL Financial is 2.07 times more volatile than DoubleDragon Properties Corp. It trades about 0.05 of its potential returns per unit of risk. DoubleDragon Properties Corp is currently generating about -0.05 per unit of risk. If you would invest  160.00  in COL Financial Group on December 5, 2024 and sell it today you would earn a total of  8.00  from holding COL Financial Group or generate 5.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.55%
Values	Daily Returns

COL Financial Group  vs.  DoubleDragon Properties Corp

COL Financial Group

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in COL Financial Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, COL Financial may actually be approaching a critical reversion point that can send shares even higher in April 2025.

DoubleDragon Properties

Risk-Adjusted Performance

Very Weak

Over the last 90 days DoubleDragon Properties Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, DoubleDragon Properties is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with COL Financial and DoubleDragon Properties

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

The idea behind COL Financial Group and DoubleDragon Properties Corp 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .