Correlation Between Dentsu and Tremor International

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

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

Diversification Opportunities for Dentsu and Tremor International

-0.46

Correlation Coefficient

Dentsu  Tremor International

Very good diversification

The 3 months correlation between Dentsu and Tremor is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Dentsu Inc ADR and Tremor International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tremor International and Dentsu 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 Dentsu Inc ADR are associated (or correlated) with Tremor International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tremor International has no effect on the direction of Dentsu i.e., Dentsu and Tremor International go up and down completely randomly.

Pair Corralation between Dentsu and Tremor International

Assuming the 90 days horizon Dentsu Inc ADR is expected to under-perform the Tremor International. But the pink sheet apears to be less risky and, when comparing its historical volatility, Dentsu Inc ADR is 15.64 times less risky than Tremor International. The pink sheet trades about -0.06 of its potential returns per unit of risk. The Tremor International is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  500.00  in Tremor International on December 20, 2024 and sell it today you would earn a total of  215.00  from holding Tremor International or generate 43.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Dentsu Inc ADR  vs.  Tremor International

Dentsu Inc ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dentsu Inc ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Tremor International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tremor International are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Tremor International reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dentsu and Tremor International

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

The idea behind Dentsu Inc ADR and Tremor International 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 Commodity Directory module to find actively traded commodities issued by global exchanges.