Correlation Between DLH Holdings and Premium Catering
Can any of the company-specific risk be diversified away by investing in both DLH Holdings and Premium Catering 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 DLH Holdings and Premium Catering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DLH Holdings Corp and Premium Catering Limited, you can compare the effects of market volatilities on DLH Holdings and Premium Catering 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 DLH Holdings with a short position of Premium Catering. Check out your portfolio center. Please also check ongoing floating volatility patterns of DLH Holdings and Premium Catering.
Diversification Opportunities for DLH Holdings and Premium Catering
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between DLH and Premium is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding DLH Holdings Corp and Premium Catering Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premium Catering and DLH Holdings 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 DLH Holdings Corp are associated (or correlated) with Premium Catering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premium Catering has no effect on the direction of DLH Holdings i.e., DLH Holdings and Premium Catering go up and down completely randomly.
Pair Corralation between DLH Holdings and Premium Catering
Given the investment horizon of 90 days DLH Holdings Corp is expected to under-perform the Premium Catering. But the stock apears to be less risky and, when comparing its historical volatility, DLH Holdings Corp is 2.44 times less risky than Premium Catering. The stock trades about -0.05 of its potential returns per unit of risk. The Premium Catering Limited is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 73.00 in Premium Catering Limited on October 6, 2024 and sell it today you would earn a total of 12.00 from holding Premium Catering Limited or generate 16.44% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 97.62% |
Values | Daily Returns |
DLH Holdings Corp vs. Premium Catering Limited
Performance |
Timeline |
DLH Holdings Corp |
Premium Catering |
DLH Holdings and Premium Catering Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with DLH Holdings and Premium Catering
The main advantage of trading using opposite DLH Holdings and Premium Catering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DLH Holdings position performs unexpectedly, Premium Catering 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 Premium Catering will offset losses from the drop in Premium Catering's long position.DLH Holdings vs. First Advantage Corp | DLH Holdings vs. Discount Print USA | DLH Holdings vs. Cass Information Systems | DLH Holdings vs. Civeo Corp |
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Check out your portfolio center.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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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