Correlation Between Dan Hotels and Nrgene Technologies

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

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

Diversification Opportunities for Dan Hotels and Nrgene Technologies

0.11

Correlation Coefficient

Dan Hotels  Nrgene Technologies

Average diversification

The 3 months correlation between Dan and Nrgene is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Dan Hotels and Nrgene Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nrgene Technologies and Dan Hotels 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 Dan Hotels are associated (or correlated) with Nrgene Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nrgene Technologies has no effect on the direction of Dan Hotels i.e., Dan Hotels and Nrgene Technologies go up and down completely randomly.

Pair Corralation between Dan Hotels and Nrgene Technologies

Assuming the 90 days trading horizon Dan Hotels is expected to generate 1.12 times less return on investment than Nrgene Technologies. But when comparing it to its historical volatility, Dan Hotels is 2.04 times less risky than Nrgene Technologies. It trades about 0.01 of its potential returns per unit of risk. Nrgene Technologies is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  44,450  in Nrgene Technologies on October 11, 2024 and sell it today you would lose (12,840) from holding Nrgene Technologies or give up 28.89% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.74%
Values	Daily Returns

Dan Hotels  vs.  Nrgene Technologies

Dan Hotels

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dan Hotels has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Dan Hotels is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Nrgene Technologies

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nrgene Technologies are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Nrgene Technologies is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dan Hotels and Nrgene Technologies

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

The idea behind Dan Hotels and Nrgene Technologies 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.