Correlation Between DMCI Holdings and Compass Diversified

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

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

Diversification Opportunities for DMCI Holdings and Compass Diversified

0.0

Correlation Coefficient

DMCI Holdings  Compass Diversified

Pay attention - limited upside

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

Pair Corralation between DMCI Holdings and Compass Diversified

If you would invest (100.00) in DMCI Holdings ADR on December 1, 2024 and sell it today you would earn a total of  100.00  from holding DMCI Holdings ADR or generate -100.0% return on investment over 90 days.

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

DMCI Holdings ADR  vs.  Compass Diversified Holdings

DMCI Holdings ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days DMCI Holdings ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical indicators, DMCI Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Compass Diversified

Risk-Adjusted Performance

Very Weak

Over the last 90 days Compass Diversified Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Stock's fundamental indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with DMCI Holdings and Compass Diversified

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

The idea behind DMCI Holdings ADR and Compass Diversified Holdings 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.