Correlation Between DubberLimited and Shotspotter

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

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

Diversification Opportunities for DubberLimited and Shotspotter

0.06

Correlation Coefficient

DubberLimited  Shotspotter

Significant diversification

The 3 months correlation between DubberLimited and Shotspotter is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Dubber Limited and Shotspotter in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shotspotter 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 Shotspotter. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shotspotter has no effect on the direction of DubberLimited i.e., DubberLimited and Shotspotter go up and down completely randomly.

Pair Corralation between DubberLimited and Shotspotter

Assuming the 90 days horizon Dubber Limited is expected to generate 12.1 times more return on investment than Shotspotter. However, DubberLimited is 12.1 times more volatile than Shotspotter. It trades about 0.03 of its potential returns per unit of risk. Shotspotter is currently generating about -0.03 per unit of risk. If you would invest  31.00  in Dubber Limited on October 3, 2024 and sell it today you would lose (28.50) from holding Dubber Limited or give up 91.94% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

Dubber Limited  vs.  Shotspotter

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.

Shotspotter

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Shotspotter are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, Shotspotter demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DubberLimited and Shotspotter

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

The idea behind Dubber Limited and Shotspotter 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.