Correlation Between DIC and Deluxe

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

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

Diversification Opportunities for DIC and Deluxe

0.0

Correlation Coefficient

DIC  Deluxe

Pay attention - limited upside

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

Pair Corralation between DIC and Deluxe

Assuming the 90 days horizon DIC Corporation is expected to generate 2.03 times more return on investment than Deluxe. However, DIC is 2.03 times more volatile than Deluxe. It trades about 0.52 of its potential returns per unit of risk. Deluxe is currently generating about 0.03 per unit of risk. If you would invest  1,783  in DIC Corporation on October 11, 2024 and sell it today you would earn a total of  269.00  from holding DIC Corporation or generate 15.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.21%
Values	Daily Returns

DIC Corp.  vs.  Deluxe

DIC Corporation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DIC Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, DIC is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Deluxe

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Deluxe are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating essential indicators, Deluxe showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DIC and Deluxe

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

The idea behind DIC Corporation and Deluxe 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.