Correlation Between DY6 Metals and Advanced Braking

Can any of the company-specific risk be diversified away by investing in both DY6 Metals and Advanced Braking 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 DY6 Metals and Advanced Braking into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DY6 Metals and Advanced Braking Technology, you can compare the effects of market volatilities on DY6 Metals and Advanced Braking 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 DY6 Metals with a short position of Advanced Braking. Check out your portfolio center. Please also check ongoing floating volatility patterns of DY6 Metals and Advanced Braking.

Diversification Opportunities for DY6 Metals and Advanced Braking

-0.11

Correlation Coefficient

DY6 Metals  Advanced Braking

Good diversification

The 3 months correlation between DY6 and Advanced is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding DY6 Metals and Advanced Braking Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Braking Tec and DY6 Metals 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 DY6 Metals are associated (or correlated) with Advanced Braking. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Braking Tec has no effect on the direction of DY6 Metals i.e., DY6 Metals and Advanced Braking go up and down completely randomly.

Pair Corralation between DY6 Metals and Advanced Braking

Assuming the 90 days trading horizon DY6 Metals is expected to generate 2.29 times more return on investment than Advanced Braking. However, DY6 Metals is 2.29 times more volatile than Advanced Braking Technology. It trades about 0.0 of its potential returns per unit of risk. Advanced Braking Technology is currently generating about -0.02 per unit of risk. If you would invest  4.70  in DY6 Metals on December 4, 2024 and sell it today you would lose (0.40) from holding DY6 Metals or give up 8.51% of portfolio value over 90 days.

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

DY6 Metals  vs.  Advanced Braking Technology

DY6 Metals

Risk-Adjusted Performance

Very Weak

Over the last 90 days DY6 Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, DY6 Metals is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Advanced Braking Tec

Risk-Adjusted Performance

Weak

Over the last 90 days Advanced Braking Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Advanced Braking 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 DY6 Metals and Advanced Braking

The main advantage of trading using opposite DY6 Metals and Advanced Braking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DY6 Metals position performs unexpectedly, Advanced Braking 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 Advanced Braking will offset losses from the drop in Advanced Braking's long position.

The idea behind DY6 Metals and Advanced Braking Technology 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.