Correlation Between Dear Cashmere and Direct Equity

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

By analyzing existing cross correlation between Dear Cashmere Holding and Direct Equity International, you can compare the effects of market volatilities on Dear Cashmere and Direct Equity 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 Dear Cashmere with a short position of Direct Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dear Cashmere and Direct Equity.

Diversification Opportunities for Dear Cashmere and Direct Equity

-0.55

Correlation Coefficient

Dear Cashmere  Direct Equity

Excellent diversification

The 3 months correlation between Dear and Direct is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Dear Cashmere Holding and Direct Equity International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direct Equity Intern and Dear Cashmere 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 Dear Cashmere Holding are associated (or correlated) with Direct Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direct Equity Intern has no effect on the direction of Dear Cashmere i.e., Dear Cashmere and Direct Equity go up and down completely randomly.

Pair Corralation between Dear Cashmere and Direct Equity

If you would invest  0.03  in Direct Equity International on December 2, 2024 and sell it today you would earn a total of  0.00  from holding Direct Equity International or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Dear Cashmere Holding  vs.  Direct Equity International

Dear Cashmere Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dear Cashmere Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Even with abnormal performance in the last few months, the Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Direct Equity Intern

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Direct Equity International are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, Direct Equity demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dear Cashmere and Direct Equity

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

The idea behind Dear Cashmere Holding and Direct Equity 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.