Correlation Between DexCom and DIH Holdings

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

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

Diversification Opportunities for DexCom and DIH Holdings

-0.47

Correlation Coefficient

DexCom  DIH Holdings

Very good diversification

The 3 months correlation between DexCom and DIH is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding DexCom Inc and DIH Holdings US, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DIH Holdings US, and DexCom 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 DexCom Inc are associated (or correlated) with DIH Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DIH Holdings US, has no effect on the direction of DexCom i.e., DexCom and DIH Holdings go up and down completely randomly.

Pair Corralation between DexCom and DIH Holdings

Given the investment horizon of 90 days DexCom Inc is expected to under-perform the DIH Holdings. But the stock apears to be less risky and, when comparing its historical volatility, DexCom Inc is 2.3 times less risky than DIH Holdings. The stock trades about -0.03 of its potential returns per unit of risk. The DIH Holdings US, is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  160.00  in DIH Holdings US, on September 17, 2024 and sell it today you would lose (20.00) from holding DIH Holdings US, or give up 12.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	87.1%
Values	Daily Returns

DexCom Inc  vs.  DIH Holdings US,

DexCom Inc

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in DexCom Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, DexCom may actually be approaching a critical reversion point that can send shares even higher in January 2025.

DIH Holdings US,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DIH Holdings US, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with DexCom and DIH Holdings

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

The idea behind DexCom Inc and DIH Holdings US, 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.