Correlation Between Dug Technology Ltd and Wesfarmers

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

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

Diversification Opportunities for Dug Technology Ltd and Wesfarmers

0.02

Correlation Coefficient

Dug Technology Ltd  Wesfarmers

Significant diversification

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

Pair Corralation between Dug Technology Ltd and Wesfarmers

Assuming the 90 days trading horizon Dug Technology is expected to under-perform the Wesfarmers. In addition to that, Dug Technology Ltd is 3.58 times more volatile than Wesfarmers. It trades about -0.04 of its total potential returns per unit of risk. Wesfarmers is currently generating about 0.03 per unit of volatility. If you would invest  7,153  in Wesfarmers on December 30, 2024 and sell it today you would earn a total of  136.00  from holding Wesfarmers or generate 1.9% return on investment over 90 days.

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

Dug Technology  vs.  Wesfarmers

Dug Technology Ltd

Risk-Adjusted Performance

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 latest uncertain performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Wesfarmers

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Wesfarmers are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Wesfarmers 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 Ltd and Wesfarmers

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

The idea behind Dug Technology and Wesfarmers 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.