Correlation Between Dexon Technology and Grande Asset

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

By analyzing existing cross correlation between Dexon Technology PCL and Grande Asset Hotels, you can compare the effects of market volatilities on Dexon Technology and Grande Asset 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 Dexon Technology with a short position of Grande Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dexon Technology and Grande Asset.

Diversification Opportunities for Dexon Technology and Grande Asset

0.06

Correlation Coefficient

Dexon Technology  Grande Asset

Significant diversification

The 3 months correlation between Dexon and Grande is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Dexon Technology PCL and Grande Asset Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grande Asset Hotels and Dexon Technology 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 Dexon Technology PCL are associated (or correlated) with Grande Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grande Asset Hotels has no effect on the direction of Dexon Technology i.e., Dexon Technology and Grande Asset go up and down completely randomly.

Pair Corralation between Dexon Technology and Grande Asset

Assuming the 90 days trading horizon Dexon Technology is expected to generate 3.25 times less return on investment than Grande Asset. But when comparing it to its historical volatility, Dexon Technology PCL is 4.65 times less risky than Grande Asset. It trades about 0.03 of its potential returns per unit of risk. Grande Asset Hotels is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  6.00  in Grande Asset Hotels on December 30, 2024 and sell it today you would lose (2.00) from holding Grande Asset Hotels or give up 33.33% of portfolio value over 90 days.

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

Dexon Technology PCL  vs.  Grande Asset Hotels

Dexon Technology PCL

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dexon Technology PCL are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, Dexon Technology is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Grande Asset Hotels

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Grande Asset Hotels are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental drivers, Grande Asset sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dexon Technology and Grande Asset

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

The idea behind Dexon Technology PCL and Grande Asset Hotels 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.