Correlation Between Dexterra and Baylin Technologies

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

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

Diversification Opportunities for Dexterra and Baylin Technologies

-0.71

Correlation Coefficient

Dexterra  Baylin Technologies

Pay attention - limited upside

The 3 months correlation between Dexterra and Baylin is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Dexterra Group and Baylin Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baylin Technologies and Dexterra 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 Dexterra Group are associated (or correlated) with Baylin Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baylin Technologies has no effect on the direction of Dexterra i.e., Dexterra and Baylin Technologies go up and down completely randomly.

Pair Corralation between Dexterra and Baylin Technologies

Assuming the 90 days trading horizon Dexterra is expected to generate 1.57 times less return on investment than Baylin Technologies. But when comparing it to its historical volatility, Dexterra Group is 3.42 times less risky than Baylin Technologies. It trades about 0.06 of its potential returns per unit of risk. Baylin Technologies is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  39.00  in Baylin Technologies on October 10, 2024 and sell it today you would earn a total of  1.00  from holding Baylin Technologies or generate 2.56% return on investment over 90 days.

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

Dexterra Group  vs.  Baylin Technologies

Dexterra Group

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dexterra Group are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Dexterra displayed solid returns over the last few months and may actually be approaching a breakup point.

Baylin Technologies

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Baylin Technologies are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy essential indicators, Baylin Technologies is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Dexterra and Baylin Technologies

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

The idea behind Dexterra Group and Baylin Technologies 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.