Correlation Between DUSK and PAY

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

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

Diversification Opportunities for DUSK and PAY

0.35

Correlation Coefficient

DUSK  PAY

Weak diversification

The 3 months correlation between DUSK and PAY is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding DUSK and PAY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PAY and DUSK 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 DUSK are associated (or correlated) with PAY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PAY has no effect on the direction of DUSK i.e., DUSK and PAY go up and down completely randomly.

Pair Corralation between DUSK and PAY

Assuming the 90 days trading horizon DUSK is expected to under-perform the PAY. But the crypto coin apears to be less risky and, when comparing its historical volatility, DUSK is 1.3 times less risky than PAY. The crypto coin trades about -0.22 of its potential returns per unit of risk. The PAY is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  0.65  in PAY on December 29, 2024 and sell it today you would lose (0.10) from holding PAY or give up 16.03% of portfolio value over 90 days.

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

DUSK  vs.  PAY

DUSK

Risk-Adjusted Performance

Very Weak

Over the last 90 days DUSK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for DUSK shareholders.

PAY

Risk-Adjusted Performance

Very Weak

Over the last 90 days PAY has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, PAY is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with DUSK and PAY

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

The idea behind DUSK and PAY 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.