Correlation Between DT Cloud and Carlyle

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

By analyzing existing cross correlation between DT Cloud Star and The Carlyle Group, you can compare the effects of market volatilities on DT Cloud and Carlyle 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 DT Cloud with a short position of Carlyle. Check out your portfolio center. Please also check ongoing floating volatility patterns of DT Cloud and Carlyle.

Diversification Opportunities for DT Cloud and Carlyle

-0.75

Correlation Coefficient

DT Cloud  Carlyle

Pay attention - limited upside

The 3 months correlation between DTSQ and Carlyle is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding DT Cloud Star and The Carlyle Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlyle Group and DT Cloud 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 DT Cloud Star are associated (or correlated) with Carlyle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlyle Group has no effect on the direction of DT Cloud i.e., DT Cloud and Carlyle go up and down completely randomly.

Pair Corralation between DT Cloud and Carlyle

Given the investment horizon of 90 days DT Cloud is expected to generate 6.7 times less return on investment than Carlyle. But when comparing it to its historical volatility, DT Cloud Star is 12.28 times less risky than Carlyle. It trades about 0.11 of its potential returns per unit of risk. The Carlyle Group is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,486  in The Carlyle Group on September 24, 2024 and sell it today you would earn a total of  327.00  from holding The Carlyle Group or generate 22.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	24.4%
Values	Daily Returns

DT Cloud Star  vs.  The Carlyle Group

DT Cloud Star

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DT Cloud Star are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, DT Cloud is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Carlyle Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Carlyle Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental drivers remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with DT Cloud and Carlyle

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

The idea behind DT Cloud Star and The Carlyle Group 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.

Check out your portfolio center.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.