Correlation Between Dorel Industries and Nanalysis Scientific

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

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

Diversification Opportunities for Dorel Industries and Nanalysis Scientific

0.71

Correlation Coefficient

Dorel Industries  Nanalysis Scientific

Poor diversification

The 3 months correlation between Dorel and Nanalysis is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Dorel Industries and Nanalysis Scientific Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nanalysis Scientific Corp and Dorel Industries 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 Dorel Industries are associated (or correlated) with Nanalysis Scientific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nanalysis Scientific Corp has no effect on the direction of Dorel Industries i.e., Dorel Industries and Nanalysis Scientific go up and down completely randomly.

Pair Corralation between Dorel Industries and Nanalysis Scientific

Assuming the 90 days trading horizon Dorel Industries is expected to under-perform the Nanalysis Scientific. But the stock apears to be less risky and, when comparing its historical volatility, Dorel Industries is 1.23 times less risky than Nanalysis Scientific. The stock trades about -0.07 of its potential returns per unit of risk. The Nanalysis Scientific Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  40.00  in Nanalysis Scientific Corp on October 13, 2024 and sell it today you would lose (2.00) from holding Nanalysis Scientific Corp or give up 5.0% of portfolio value over 90 days.

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

Dorel Industries  vs.  Nanalysis Scientific Corp

Dorel Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dorel Industries 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 stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Nanalysis Scientific Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nanalysis Scientific Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal fundamental indicators, Nanalysis Scientific may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Dorel Industries and Nanalysis Scientific

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

The idea behind Dorel Industries and Nanalysis Scientific Corp 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.