Correlation Between Decade Resources and Organogenesis Holdings

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

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

Diversification Opportunities for Decade Resources and Organogenesis Holdings

-0.27

Correlation Coefficient

Decade Resources  Organogenesis Holdings

Very good diversification

The 3 months correlation between Decade and Organogenesis is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Decade Resources and Organogenesis Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Organogenesis Holdings and Decade Resources 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 Decade Resources are associated (or correlated) with Organogenesis Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Organogenesis Holdings has no effect on the direction of Decade Resources i.e., Decade Resources and Organogenesis Holdings go up and down completely randomly.

Pair Corralation between Decade Resources and Organogenesis Holdings

Assuming the 90 days horizon Decade Resources is expected to generate 3.5 times more return on investment than Organogenesis Holdings. However, Decade Resources is 3.5 times more volatile than Organogenesis Holdings. It trades about 0.04 of its potential returns per unit of risk. Organogenesis Holdings is currently generating about 0.03 per unit of risk. If you would invest  8.50  in Decade Resources on October 5, 2024 and sell it today you would lose (6.92) from holding Decade Resources or give up 81.41% of portfolio value over 90 days.

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

Decade Resources  vs.  Organogenesis Holdings

Decade Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Decade Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Decade Resources is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Organogenesis Holdings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Organogenesis Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent technical and fundamental indicators, Organogenesis Holdings may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Decade Resources and Organogenesis Holdings

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

The idea behind Decade Resources and Organogenesis Holdings 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.