Correlation Between DFS Furniture and GRUPO CARSO

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

By analyzing existing cross correlation between DFS Furniture PLC and GRUPO CARSO A1, you can compare the effects of market volatilities on DFS Furniture and GRUPO CARSO 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 DFS Furniture with a short position of GRUPO CARSO. Check out your portfolio center. Please also check ongoing floating volatility patterns of DFS Furniture and GRUPO CARSO.

Diversification Opportunities for DFS Furniture and GRUPO CARSO

0.1

Correlation Coefficient

DFS Furniture  GRUPO CARSO

Average diversification

The 3 months correlation between DFS and GRUPO is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding DFS Furniture PLC and GRUPO CARSO A1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GRUPO CARSO A1 and DFS Furniture 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 DFS Furniture PLC are associated (or correlated) with GRUPO CARSO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GRUPO CARSO A1 has no effect on the direction of DFS Furniture i.e., DFS Furniture and GRUPO CARSO go up and down completely randomly.

Pair Corralation between DFS Furniture and GRUPO CARSO

Assuming the 90 days trading horizon DFS Furniture is expected to generate 2.44 times less return on investment than GRUPO CARSO. But when comparing it to its historical volatility, DFS Furniture PLC is 1.64 times less risky than GRUPO CARSO. It trades about 0.02 of its potential returns per unit of risk. GRUPO CARSO A1 is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  545.00  in GRUPO CARSO A1 on October 26, 2024 and sell it today you would earn a total of  15.00  from holding GRUPO CARSO A1 or generate 2.75% return on investment over 90 days.

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

DFS Furniture PLC  vs.  GRUPO CARSO A1

DFS Furniture PLC

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in DFS Furniture PLC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, DFS Furniture is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

GRUPO CARSO A1

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GRUPO CARSO A1 are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, GRUPO CARSO may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with DFS Furniture and GRUPO CARSO

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

The idea behind DFS Furniture PLC and GRUPO CARSO A1 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.