Correlation Between Dantax and RIAS AS

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

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

Diversification Opportunities for Dantax and RIAS AS

0.11

Correlation Coefficient

Dantax  RIAS AS

Average diversification

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

Pair Corralation between Dantax and RIAS AS

Assuming the 90 days trading horizon Dantax is expected to generate 1.52 times more return on investment than RIAS AS. However, Dantax is 1.52 times more volatile than RIAS AS. It trades about 0.1 of its potential returns per unit of risk. RIAS AS is currently generating about -0.04 per unit of risk. If you would invest  43,000  in Dantax on December 30, 2024 and sell it today you would earn a total of  5,800  from holding Dantax or generate 13.49% return on investment over 90 days.

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

Dantax  vs.  RIAS AS

Dantax

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dantax are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Dantax displayed solid returns over the last few months and may actually be approaching a breakup point.

RIAS AS

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Dantax and RIAS AS

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

The idea behind Dantax and RIAS AS 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.