Correlation Between Dlocal and Hashicorp

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

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

Diversification Opportunities for Dlocal and Hashicorp

-0.53

Correlation Coefficient

Dlocal  Hashicorp

Excellent diversification

The 3 months correlation between Dlocal and Hashicorp is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Dlocal and Hashicorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hashicorp and Dlocal 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 Dlocal are associated (or correlated) with Hashicorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hashicorp has no effect on the direction of Dlocal i.e., Dlocal and Hashicorp go up and down completely randomly.

Pair Corralation between Dlocal and Hashicorp

Considering the 90-day investment horizon Dlocal is expected to generate 11.06 times more return on investment than Hashicorp. However, Dlocal is 11.06 times more volatile than Hashicorp. It trades about 0.26 of its potential returns per unit of risk. Hashicorp is currently generating about 0.07 per unit of risk. If you would invest  883.00  in Dlocal on September 19, 2024 and sell it today you would earn a total of  366.50  from holding Dlocal or generate 41.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Dlocal  vs.  Hashicorp

Dlocal

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dlocal are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady essential indicators, Dlocal displayed solid returns over the last few months and may actually be approaching a breakup point.

Hashicorp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Dlocal and Hashicorp

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

The idea behind Dlocal and Hashicorp 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.