Correlation Between DHI and I Mab

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

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

Diversification Opportunities for DHI and I Mab

0.44

Correlation Coefficient

DHI  I Mab

Very weak diversification

The 3 months correlation between DHI and IMAB is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding DHI Group and I Mab in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on I Mab and DHI 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 DHI Group are associated (or correlated) with I Mab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of I Mab has no effect on the direction of DHI i.e., DHI and I Mab go up and down completely randomly.

Pair Corralation between DHI and I Mab

Considering the 90-day investment horizon DHI Group is expected to under-perform the I Mab. In addition to that, DHI is 1.25 times more volatile than I Mab. It trades about -0.03 of its total potential returns per unit of risk. I Mab is currently generating about -0.02 per unit of volatility. If you would invest  95.00  in I Mab on December 17, 2024 and sell it today you would lose (10.00) from holding I Mab or give up 10.53% of portfolio value over 90 days.

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

DHI Group  vs.  I Mab

DHI Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days DHI Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's technical indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

I Mab

Risk-Adjusted Performance

Very Weak

Over the last 90 days I Mab has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, I Mab is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with DHI and I Mab

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

The idea behind DHI Group and I Mab 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .