Correlation Between Dug Technology and Oceania Healthcare

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

By analyzing existing cross correlation between Dug Technology and Oceania Healthcare, you can compare the effects of market volatilities on Dug Technology and Oceania Healthcare 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 Dug Technology with a short position of Oceania Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dug Technology and Oceania Healthcare.

Diversification Opportunities for Dug Technology and Oceania Healthcare

0.2

Correlation Coefficient

Dug Technology  Oceania Healthcare

Modest diversification

The 3 months correlation between Dug and Oceania is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Dug Technology and Oceania Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oceania Healthcare and Dug Technology 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 Dug Technology are associated (or correlated) with Oceania Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oceania Healthcare has no effect on the direction of Dug Technology i.e., Dug Technology and Oceania Healthcare go up and down completely randomly.

Pair Corralation between Dug Technology and Oceania Healthcare

Assuming the 90 days trading horizon Dug Technology is expected to generate 1.0 times more return on investment than Oceania Healthcare. However, Dug Technology is 1.0 times less risky than Oceania Healthcare. It trades about 0.07 of its potential returns per unit of risk. Oceania Healthcare is currently generating about 0.01 per unit of risk. If you would invest  63.00  in Dug Technology on September 20, 2024 and sell it today you would earn a total of  77.00  from holding Dug Technology or generate 122.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Dug Technology  vs.  Oceania Healthcare

Dug Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dug Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Oceania Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oceania Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Oceania Healthcare is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Dug Technology and Oceania Healthcare

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

The idea behind Dug Technology and Oceania Healthcare 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.