Correlation Between Dowlais Group and Skechers USA

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

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

Diversification Opportunities for Dowlais Group and Skechers USA

-0.34

Correlation Coefficient

Dowlais Group  Skechers USA

Very good diversification

The 3 months correlation between Dowlais and Skechers is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Dowlais Group plc and Skechers USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skechers USA and Dowlais Group 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 Dowlais Group plc are associated (or correlated) with Skechers USA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skechers USA has no effect on the direction of Dowlais Group i.e., Dowlais Group and Skechers USA go up and down completely randomly.

Pair Corralation between Dowlais Group and Skechers USA

Assuming the 90 days horizon Dowlais Group plc is expected to generate 1.13 times more return on investment than Skechers USA. However, Dowlais Group is 1.13 times more volatile than Skechers USA. It trades about 0.09 of its potential returns per unit of risk. Skechers USA is currently generating about -0.1 per unit of risk. If you would invest  73.00  in Dowlais Group plc on December 22, 2024 and sell it today you would earn a total of  11.00  from holding Dowlais Group plc or generate 15.07% return on investment over 90 days.

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

Dowlais Group plc  vs.  Skechers USA

Dowlais Group plc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dowlais Group plc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Dowlais Group reported solid returns over the last few months and may actually be approaching a breakup point.

Skechers USA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Skechers USA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's forward-looking signals remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Dowlais Group and Skechers USA

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

The idea behind Dowlais Group plc and Skechers USA 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.