Correlation Between Dcon Products and General Engineering

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

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

Diversification Opportunities for Dcon Products and General Engineering

0.18

Correlation Coefficient

Dcon Products  General Engineering

Average diversification

The 3 months correlation between Dcon and General is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Dcon Products Public and General Engineering Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Engineering and Dcon Products 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 Dcon Products Public are associated (or correlated) with General Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Engineering has no effect on the direction of Dcon Products i.e., Dcon Products and General Engineering go up and down completely randomly.

Pair Corralation between Dcon Products and General Engineering

Assuming the 90 days trading horizon Dcon Products is expected to generate 1.0 times less return on investment than General Engineering. In addition to that, Dcon Products is 1.01 times more volatile than General Engineering Public. It trades about 0.11 of its total potential returns per unit of risk. General Engineering Public is currently generating about 0.11 per unit of volatility. If you would invest  9.00  in General Engineering Public on August 31, 2024 and sell it today you would earn a total of  1.00  from holding General Engineering Public or generate 11.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Dcon Products Public  vs.  General Engineering Public

Dcon Products Public

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dcon Products Public are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Dcon Products disclosed solid returns over the last few months and may actually be approaching a breakup point.

General Engineering

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in General Engineering Public are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, General Engineering disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dcon Products and General Engineering

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

The idea behind Dcon Products Public and General Engineering Public 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.