Correlation Between DubberLimited and ProStar Holdings

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

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

Diversification Opportunities for DubberLimited and ProStar Holdings

-0.02

Correlation Coefficient

DubberLimited  ProStar Holdings

Good diversification

The 3 months correlation between DubberLimited and ProStar is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Dubber Limited and ProStar Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProStar Holdings and DubberLimited 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 Dubber Limited are associated (or correlated) with ProStar Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProStar Holdings has no effect on the direction of DubberLimited i.e., DubberLimited and ProStar Holdings go up and down completely randomly.

Pair Corralation between DubberLimited and ProStar Holdings

Assuming the 90 days horizon Dubber Limited is expected to generate 9.26 times more return on investment than ProStar Holdings. However, DubberLimited is 9.26 times more volatile than ProStar Holdings. It trades about 0.07 of its potential returns per unit of risk. ProStar Holdings is currently generating about -0.18 per unit of risk. If you would invest  5.09  in Dubber Limited on September 1, 2024 and sell it today you would lose (2.09) from holding Dubber Limited or give up 41.06% of portfolio value over 90 days.

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

Dubber Limited  vs.  ProStar Holdings

Dubber Limited

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dubber Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, DubberLimited reported solid returns over the last few months and may actually be approaching a breakup point.

ProStar Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProStar Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with DubberLimited and ProStar Holdings

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

The idea behind Dubber Limited and ProStar Holdings 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.