Correlation Between DIH Holdings and Ecolab

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

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

Diversification Opportunities for DIH Holdings and Ecolab

0.52

Correlation Coefficient

DIH Holdings  Ecolab

Very weak diversification

The 3 months correlation between DIH and Ecolab is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding DIH Holdings US, and Ecolab Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecolab Inc and DIH Holdings 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 DIH Holdings US, are associated (or correlated) with Ecolab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecolab Inc has no effect on the direction of DIH Holdings i.e., DIH Holdings and Ecolab go up and down completely randomly.

Pair Corralation between DIH Holdings and Ecolab

Given the investment horizon of 90 days DIH Holdings US, is expected to generate 6.35 times more return on investment than Ecolab. However, DIH Holdings is 6.35 times more volatile than Ecolab Inc. It trades about 0.03 of its potential returns per unit of risk. Ecolab Inc is currently generating about 0.1 per unit of risk. If you would invest  160.00  in DIH Holdings US, on September 18, 2024 and sell it today you would lose (23.00) from holding DIH Holdings US, or give up 14.37% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	43.64%
Values	Daily Returns

DIH Holdings US,  vs.  Ecolab Inc

DIH Holdings US,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DIH Holdings US, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Ecolab Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ecolab Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Ecolab is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with DIH Holdings and Ecolab

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

The idea behind DIH Holdings US, and Ecolab Inc 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.