Correlation Between Dicker Data and CSL

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

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

Diversification Opportunities for Dicker Data and CSL

0.58

Correlation Coefficient

Dicker Data  CSL

Very weak diversification

The 3 months correlation between Dicker and CSL is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Dicker Data and CSL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSL and Dicker Data 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 Dicker Data are associated (or correlated) with CSL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSL has no effect on the direction of Dicker Data i.e., Dicker Data and CSL go up and down completely randomly.

Pair Corralation between Dicker Data and CSL

Assuming the 90 days trading horizon Dicker Data is expected to under-perform the CSL. In addition to that, Dicker Data is 1.84 times more volatile than CSL. It trades about -0.04 of its total potential returns per unit of risk. CSL is currently generating about -0.02 per unit of volatility. If you would invest  28,671  in CSL on September 15, 2024 and sell it today you would lose (916.00) from holding CSL or give up 3.19% of portfolio value over 90 days.

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

Dicker Data  vs.  CSL

Dicker Data

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dicker Data has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Dicker Data is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

CSL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CSL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, CSL is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Dicker Data and CSL

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

The idea behind Dicker Data and CSL 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.