Correlation Between Dye Durham and Topicus

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

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

Diversification Opportunities for Dye Durham and Topicus

-0.59

Correlation Coefficient

Dye Durham  Topicus

Excellent diversification

The 3 months correlation between Dye and Topicus is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Dye Durham and Topicus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Topicus and Dye Durham 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 Dye Durham are associated (or correlated) with Topicus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Topicus has no effect on the direction of Dye Durham i.e., Dye Durham and Topicus go up and down completely randomly.

Pair Corralation between Dye Durham and Topicus

Assuming the 90 days trading horizon Dye Durham is expected to under-perform the Topicus. In addition to that, Dye Durham is 2.01 times more volatile than Topicus. It trades about -0.13 of its total potential returns per unit of risk. Topicus is currently generating about 0.14 per unit of volatility. If you would invest  12,180  in Topicus on December 28, 2024 and sell it today you would earn a total of  2,305  from holding Topicus or generate 18.92% return on investment over 90 days.

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

Dye Durham  vs.  Topicus

Dye Durham

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dye Durham has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Topicus

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Topicus are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Topicus showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dye Durham and Topicus

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

The idea behind Dye Durham and Topicus 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.