Correlation Between DIC Holdings and FIT INVEST

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

By analyzing existing cross correlation between DIC Holdings Construction and FIT INVEST JSC, you can compare the effects of market volatilities on DIC Holdings and FIT INVEST 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 DIC Holdings with a short position of FIT INVEST. Check out your portfolio center. Please also check ongoing floating volatility patterns of DIC Holdings and FIT INVEST.

Diversification Opportunities for DIC Holdings and FIT INVEST

0.74

Correlation Coefficient

DIC Holdings  FIT INVEST

Poor diversification

The 3 months correlation between DIC and FIT is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding DIC Holdings Construction and FIT INVEST JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIT INVEST JSC and DIC Holdings 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 DIC Holdings Construction are associated (or correlated) with FIT INVEST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIT INVEST JSC has no effect on the direction of DIC Holdings i.e., DIC Holdings and FIT INVEST go up and down completely randomly.

Pair Corralation between DIC Holdings and FIT INVEST

Assuming the 90 days trading horizon DIC Holdings Construction is expected to generate 2.62 times more return on investment than FIT INVEST. However, DIC Holdings is 2.62 times more volatile than FIT INVEST JSC. It trades about 0.35 of its potential returns per unit of risk. FIT INVEST JSC is currently generating about 0.39 per unit of risk. If you would invest  1,080,000  in DIC Holdings Construction on December 1, 2024 and sell it today you would earn a total of  170,000  from holding DIC Holdings Construction or generate 15.74% return on investment over 90 days.

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

DIC Holdings Construction  vs.  FIT INVEST JSC

DIC Holdings Construction

Risk-Adjusted Performance

Very Weak

Over the last 90 days DIC Holdings Construction has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

FIT INVEST JSC

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in FIT INVEST JSC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, FIT INVEST is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with DIC Holdings and FIT INVEST

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

The idea behind DIC Holdings Construction and FIT INVEST JSC 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.