Correlation Between Dorel Industries and Qurate Retail

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

By analyzing existing cross correlation between Dorel Industries and Qurate Retail, you can compare the effects of market volatilities on Dorel Industries and Qurate Retail 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 Qurate Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dorel Industries and Qurate Retail.

Diversification Opportunities for Dorel Industries and Qurate Retail

0.0

Correlation Coefficient

Dorel Industries  Qurate Retail

Pay attention - limited upside

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

Pair Corralation between Dorel Industries and Qurate Retail

If you would invest  4,048  in Qurate Retail on November 29, 2024 and sell it today you would lose (57.00) from holding Qurate Retail or give up 1.41% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Dorel Industries  vs.  Qurate Retail

Dorel Industries

Risk-Adjusted Performance

Very Weak

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

Qurate Retail

Risk-Adjusted Performance

Very Weak

Over the last 90 days Qurate Retail has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Qurate Retail is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Dorel Industries and Qurate Retail

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

The idea behind Dorel Industries and Qurate Retail 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.