Correlation Between Dear Cashmere and TrustBIX

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

Diversification Opportunities for Dear Cashmere and TrustBIX

0.69

Correlation Coefficient

Dear Cashmere  TrustBIX

Poor diversification

The 3 months correlation between Dear and TrustBIX is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Dear Cashmere Holding and TrustBIX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TrustBIX 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 TrustBIX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TrustBIX has no effect on the direction of Dear Cashmere i.e., Dear Cashmere and TrustBIX go up and down completely randomly.

Pair Corralation between Dear Cashmere and TrustBIX

Given the investment horizon of 90 days Dear Cashmere Holding is expected to generate 1.13 times more return on investment than TrustBIX. However, Dear Cashmere is 1.13 times more volatile than TrustBIX. It trades about -0.01 of its potential returns per unit of risk. TrustBIX is currently generating about -0.07 per unit of risk. If you would invest  12.00  in Dear Cashmere Holding on December 21, 2024 and sell it today you would lose (4.90) from holding Dear Cashmere Holding or give up 40.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Dear Cashmere Holding  vs.  TrustBIX

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 latest abnormal performance, the Stock's fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

TrustBIX

Risk-Adjusted Performance

Very Weak

Over the last 90 days TrustBIX has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Dear Cashmere and TrustBIX

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

The idea behind Dear Cashmere Holding and TrustBIX 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.