Correlation Between Domo and Roadzen

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

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

Diversification Opportunities for Domo and Roadzen

-0.7

Correlation Coefficient

Domo  Roadzen

Excellent diversification

The 3 months correlation between Domo and Roadzen is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Domo Inc and Roadzen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roadzen and Domo 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 Domo Inc are associated (or correlated) with Roadzen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roadzen has no effect on the direction of Domo i.e., Domo and Roadzen go up and down completely randomly.

Pair Corralation between Domo and Roadzen

Given the investment horizon of 90 days Domo Inc is expected to under-perform the Roadzen. But the stock apears to be less risky and, when comparing its historical volatility, Domo Inc is 8.78 times less risky than Roadzen. The stock trades about 0.0 of its potential returns per unit of risk. The Roadzen is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  7.98  in Roadzen on October 8, 2024 and sell it today you would earn a total of  10.02  from holding Roadzen or generate 125.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	58.06%
Values	Daily Returns

Domo Inc  vs.  Roadzen

Domo Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Domo Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Domo is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Roadzen

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Roadzen are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, Roadzen showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Domo and Roadzen

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

The idea behind Domo Inc and Roadzen 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.