Correlation Between Doman Building and Mullen

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

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

Diversification Opportunities for Doman Building and Mullen

0.81

Correlation Coefficient

Doman Building  Mullen

Very poor diversification

The 3 months correlation between Doman and Mullen is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Doman Building Materials and Mullen Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mullen Group and Doman Building 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 Doman Building Materials are associated (or correlated) with Mullen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mullen Group has no effect on the direction of Doman Building i.e., Doman Building and Mullen go up and down completely randomly.

Pair Corralation between Doman Building and Mullen

Assuming the 90 days trading horizon Doman Building Materials is expected to generate 1.11 times more return on investment than Mullen. However, Doman Building is 1.11 times more volatile than Mullen Group. It trades about 0.0 of its potential returns per unit of risk. Mullen Group is currently generating about -0.01 per unit of risk. If you would invest  722.00  in Doman Building Materials on December 5, 2024 and sell it today you would lose (24.00) from holding Doman Building Materials or give up 3.32% of portfolio value over 90 days.

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

Doman Building Materials  vs.  Mullen Group

Doman Building Materials

Risk-Adjusted Performance

Very Weak

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

Mullen Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mullen Group 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 essential indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Doman Building and Mullen

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

The idea behind Doman Building Materials and Mullen Group 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.