Correlation Between DNA Brands and Alkame Holdings

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

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

Diversification Opportunities for DNA Brands and Alkame Holdings

0.0

Correlation Coefficient

DNA Brands  Alkame Holdings

Pay attention - limited upside

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

Pair Corralation between DNA Brands and Alkame Holdings

Given the investment horizon of 90 days DNA Brands is expected to generate 1.19 times less return on investment than Alkame Holdings. In addition to that, DNA Brands is 1.13 times more volatile than Alkame Holdings. It trades about 0.06 of its total potential returns per unit of risk. Alkame Holdings is currently generating about 0.08 per unit of volatility. If you would invest  0.03  in Alkame Holdings on September 3, 2024 and sell it today you would lose (0.02) from holding Alkame Holdings or give up 66.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

DNA Brands  vs.  Alkame Holdings

DNA Brands

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DNA Brands are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, DNA Brands showed solid returns over the last few months and may actually be approaching a breakup point.

Alkame Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alkame Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward-looking signals, Alkame Holdings is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with DNA Brands and Alkame Holdings

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

The idea behind DNA Brands and Alkame 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.

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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.