Correlation Between Dear Cashmere and Nukkleus

Can any of the company-specific risk be diversified away by investing in both Dear Cashmere and Nukkleus 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 Nukkleus 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 Nukkleus, you can compare the effects of market volatilities on Dear Cashmere and Nukkleus 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 Nukkleus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dear Cashmere and Nukkleus.

Diversification Opportunities for Dear Cashmere and Nukkleus

-0.31

Correlation Coefficient

Dear Cashmere  Nukkleus

Very good diversification

The 3 months correlation between Dear and Nukkleus is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Dear Cashmere Holding and Nukkleus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nukkleus 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 Nukkleus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nukkleus has no effect on the direction of Dear Cashmere i.e., Dear Cashmere and Nukkleus go up and down completely randomly.

Pair Corralation between Dear Cashmere and Nukkleus

Given the investment horizon of 90 days Dear Cashmere is expected to generate 61.69 times less return on investment than Nukkleus. But when comparing it to its historical volatility, Dear Cashmere Holding is 9.89 times less risky than Nukkleus. It trades about 0.02 of its potential returns per unit of risk. Nukkleus is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  220.00  in Nukkleus on October 10, 2024 and sell it today you would earn a total of  2,313  from holding Nukkleus or generate 1051.36% return on investment over 90 days.

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

Dear Cashmere Holding  vs.  Nukkleus

Dear Cashmere Holding

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dear Cashmere Holding are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal fundamental indicators, Dear Cashmere reported solid returns over the last few months and may actually be approaching a breakup point.

Nukkleus

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nukkleus are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating forward-looking signals, Nukkleus disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dear Cashmere and Nukkleus

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

The idea behind Dear Cashmere Holding and Nukkleus 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.