Correlation Between Strategic Investments and DFS Furniture

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

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

Diversification Opportunities for Strategic Investments and DFS Furniture

-0.36

Correlation Coefficient

Strategic Investments  DFS Furniture

Very good diversification

The 3 months correlation between Strategic and DFS is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Strategic Investments AS and DFS Furniture PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DFS Furniture PLC and Strategic Investments 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 Strategic Investments AS are associated (or correlated) with DFS Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DFS Furniture PLC has no effect on the direction of Strategic Investments i.e., Strategic Investments and DFS Furniture go up and down completely randomly.

Pair Corralation between Strategic Investments and DFS Furniture

Assuming the 90 days horizon Strategic Investments AS is expected to under-perform the DFS Furniture. In addition to that, Strategic Investments is 1.53 times more volatile than DFS Furniture PLC. It trades about 0.0 of its total potential returns per unit of risk. DFS Furniture PLC is currently generating about 0.03 per unit of volatility. If you would invest  146.00  in DFS Furniture PLC on September 14, 2024 and sell it today you would earn a total of  20.00  from holding DFS Furniture PLC or generate 13.7% return on investment over 90 days.

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

Strategic Investments AS  vs.  DFS Furniture PLC

Strategic Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Strategic Investments AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

DFS Furniture PLC

Risk-Adjusted Performance

11 of 100

Good

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

Pair Trading with Strategic Investments and DFS Furniture

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

The idea behind Strategic Investments AS and DFS Furniture PLC 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.