Correlation Between DHI and Minerals Technologies

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

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

Diversification Opportunities for DHI and Minerals Technologies

0.0

Correlation Coefficient

DHI  Minerals Technologies

Pay attention - limited upside

The 3 months correlation between DHI and Minerals is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding DHI Group and Minerals Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minerals Technologies 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 Minerals Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Minerals Technologies has no effect on the direction of DHI i.e., DHI and Minerals Technologies go up and down completely randomly.

Pair Corralation between DHI and Minerals Technologies

Considering the 90-day investment horizon DHI Group is expected to generate 4.46 times more return on investment than Minerals Technologies. However, DHI is 4.46 times more volatile than Minerals Technologies. It trades about -0.01 of its potential returns per unit of risk. Minerals Technologies is currently generating about -0.14 per unit of risk. If you would invest  189.00  in DHI Group on December 19, 2024 and sell it today you would lose (24.00) from holding DHI Group or give up 12.7% of portfolio value over 90 days.

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

DHI Group  vs.  Minerals Technologies

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 fairly strong technical indicators, DHI is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Minerals Technologies

Risk-Adjusted Performance

Very Weak

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

Pair Trading with DHI and Minerals Technologies

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

The idea behind DHI Group and Minerals Technologies 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.