Correlation Between DoubleDragon Properties and Converge Information

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

By analyzing existing cross correlation between DoubleDragon Properties Corp and Converge Information Communications, you can compare the effects of market volatilities on DoubleDragon Properties and Converge Information 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 DoubleDragon Properties with a short position of Converge Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of DoubleDragon Properties and Converge Information.

Diversification Opportunities for DoubleDragon Properties and Converge Information

0.66

Correlation Coefficient

DoubleDragon Properties  Converge Information

Poor diversification

The 3 months correlation between DoubleDragon and Converge is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding DoubleDragon Properties Corp and Converge Information Communica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Converge Information and DoubleDragon Properties 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 DoubleDragon Properties Corp are associated (or correlated) with Converge Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Converge Information has no effect on the direction of DoubleDragon Properties i.e., DoubleDragon Properties and Converge Information go up and down completely randomly.

Pair Corralation between DoubleDragon Properties and Converge Information

Assuming the 90 days trading horizon DoubleDragon Properties is expected to generate 2.99 times less return on investment than Converge Information. But when comparing it to its historical volatility, DoubleDragon Properties Corp is 5.39 times less risky than Converge Information. It trades about 0.18 of its potential returns per unit of risk. Converge Information Communications is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,628  in Converge Information Communications on December 26, 2024 and sell it today you would earn a total of  250.00  from holding Converge Information Communications or generate 15.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

DoubleDragon Properties Corp  vs.  Converge Information Communica

DoubleDragon Properties

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in DoubleDragon Properties Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, DoubleDragon Properties is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Converge Information

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Converge Information Communications are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Converge Information reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DoubleDragon Properties and Converge Information

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

The idea behind DoubleDragon Properties Corp and Converge Information Communications 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.