Correlation Between Dream Office and Aya Gold

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

By analyzing existing cross correlation between Dream Office Real and Aya Gold Silver, you can compare the effects of market volatilities on Dream Office and Aya Gold 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 Dream Office with a short position of Aya Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dream Office and Aya Gold.

Diversification Opportunities for Dream Office and Aya Gold

0.1

Correlation Coefficient

Dream Office  Aya Gold

Average diversification

The 3 months correlation between Dream and Aya is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Dream Office Real and Aya Gold Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aya Gold Silver and Dream Office 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 Dream Office Real are associated (or correlated) with Aya Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aya Gold Silver has no effect on the direction of Dream Office i.e., Dream Office and Aya Gold go up and down completely randomly.

Pair Corralation between Dream Office and Aya Gold

Assuming the 90 days trading horizon Dream Office is expected to generate 3.18 times less return on investment than Aya Gold. But when comparing it to its historical volatility, Dream Office Real is 2.28 times less risky than Aya Gold. It trades about 0.02 of its potential returns per unit of risk. Aya Gold Silver is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,064  in Aya Gold Silver on December 29, 2024 and sell it today you would earn a total of  16.00  from holding Aya Gold Silver or generate 1.5% return on investment over 90 days.

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

Dream Office Real  vs.  Aya Gold Silver

Dream Office Real

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dream Office Real are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Dream Office is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Aya Gold Silver

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aya Gold Silver are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Aya Gold may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Dream Office and Aya Gold

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

The idea behind Dream Office Real and Aya Gold Silver 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.