Correlation Between DIC Holdings and Transimex Transportation

Can any of the company-specific risk be diversified away by investing in both DIC Holdings and Transimex Transportation 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 Transimex Transportation 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 Transimex Transportation JSC, you can compare the effects of market volatilities on DIC Holdings and Transimex Transportation 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 Transimex Transportation. Check out your portfolio center. Please also check ongoing floating volatility patterns of DIC Holdings and Transimex Transportation.

Diversification Opportunities for DIC Holdings and Transimex Transportation

0.56

Correlation Coefficient

DIC Holdings  Transimex Transportation

Very weak diversification

The 3 months correlation between DIC and Transimex is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding DIC Holdings Construction and Transimex Transportation JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transimex Transportation 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 Transimex Transportation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transimex Transportation has no effect on the direction of DIC Holdings i.e., DIC Holdings and Transimex Transportation go up and down completely randomly.

Pair Corralation between DIC Holdings and Transimex Transportation

Assuming the 90 days trading horizon DIC Holdings is expected to generate 1.11 times less return on investment than Transimex Transportation. In addition to that, DIC Holdings is 1.05 times more volatile than Transimex Transportation JSC. It trades about 0.08 of its total potential returns per unit of risk. Transimex Transportation JSC is currently generating about 0.1 per unit of volatility. If you would invest  1,750,000  in Transimex Transportation JSC on December 30, 2024 and sell it today you would earn a total of  180,000  from holding Transimex Transportation JSC or generate 10.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	81.67%
Values	Daily Returns

DIC Holdings Construction  vs.  Transimex Transportation JSC

DIC Holdings Construction

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in DIC Holdings Construction are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, DIC Holdings displayed solid returns over the last few months and may actually be approaching a breakup point.

Transimex Transportation

Risk-Adjusted Performance

OK

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

Pair Trading with DIC Holdings and Transimex Transportation

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

The idea behind DIC Holdings Construction and Transimex Transportation 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.