Correlation Between EGain and DHI

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

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

Diversification Opportunities for EGain and DHI

0.14

Correlation Coefficient

EGain  DHI

Average diversification

The 3 months correlation between EGain and DHI is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding eGain and DHI Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DHI Group and EGain 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 eGain are associated (or correlated) with DHI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DHI Group has no effect on the direction of EGain i.e., EGain and DHI go up and down completely randomly.

Pair Corralation between EGain and DHI

Given the investment horizon of 90 days eGain is expected to generate 1.4 times more return on investment than DHI. However, EGain is 1.4 times more volatile than DHI Group. It trades about 0.05 of its potential returns per unit of risk. DHI Group is currently generating about 0.07 per unit of risk. If you would invest  518.00  in eGain on September 5, 2024 and sell it today you would earn a total of  17.00  from holding eGain or generate 3.28% return on investment over 90 days.

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

eGain  vs.  DHI Group

eGain

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days eGain has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

DHI Group

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in DHI Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical indicators, DHI may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with EGain and DHI

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

The idea behind eGain and DHI Group 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.