Correlation Between DI Global and Formuepleje Mix

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

By analyzing existing cross correlation between DI Global Sustainable and Formuepleje Mix Medium, you can compare the effects of market volatilities on DI Global and Formuepleje Mix 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 DI Global with a short position of Formuepleje Mix. Check out your portfolio center. Please also check ongoing floating volatility patterns of DI Global and Formuepleje Mix.

Diversification Opportunities for DI Global and Formuepleje Mix

0.91

Correlation Coefficient

DI Global  Formuepleje Mix

Almost no diversification

The 3 months correlation between DKIGSFUT and Formuepleje is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding DI Global Sustainable and Formuepleje Mix Medium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Formuepleje Mix Medium and DI Global 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 DI Global Sustainable are associated (or correlated) with Formuepleje Mix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Formuepleje Mix Medium has no effect on the direction of DI Global i.e., DI Global and Formuepleje Mix go up and down completely randomly.

Pair Corralation between DI Global and Formuepleje Mix

Assuming the 90 days trading horizon DI Global Sustainable is expected to under-perform the Formuepleje Mix. In addition to that, DI Global is 1.74 times more volatile than Formuepleje Mix Medium. It trades about -0.17 of its total potential returns per unit of risk. Formuepleje Mix Medium is currently generating about -0.19 per unit of volatility. If you would invest  29,550  in Formuepleje Mix Medium on December 27, 2024 and sell it today you would lose (800.00) from holding Formuepleje Mix Medium or give up 2.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.65%
Values	Daily Returns

DI Global Sustainable  vs.  Formuepleje Mix Medium

DI Global Sustainable

Risk-Adjusted Performance

Very Weak

Over the last 90 days DI Global Sustainable has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, DI Global is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Formuepleje Mix Medium

Risk-Adjusted Performance

Very Weak

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

Pair Trading with DI Global and Formuepleje Mix

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

The idea behind DI Global Sustainable and Formuepleje Mix Medium 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.