Correlation Between D MARKET and Hour Loop

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

By analyzing existing cross correlation between D MARKET Electronic Services and Hour Loop, you can compare the effects of market volatilities on D MARKET and Hour Loop 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 D MARKET with a short position of Hour Loop. Check out your portfolio center. Please also check ongoing floating volatility patterns of D MARKET and Hour Loop.

Diversification Opportunities for D MARKET and Hour Loop

0.12

Correlation Coefficient

D MARKET  Hour Loop

Average diversification

The 3 months correlation between HEPS and Hour is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding D MARKET Electronic Services and Hour Loop in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hour Loop and D MARKET 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 D MARKET Electronic Services are associated (or correlated) with Hour Loop. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hour Loop has no effect on the direction of D MARKET i.e., D MARKET and Hour Loop go up and down completely randomly.

Pair Corralation between D MARKET and Hour Loop

Given the investment horizon of 90 days D MARKET Electronic Services is expected to generate 1.22 times more return on investment than Hour Loop. However, D MARKET is 1.22 times more volatile than Hour Loop. It trades about 0.1 of its potential returns per unit of risk. Hour Loop is currently generating about 0.07 per unit of risk. If you would invest  153.00  in D MARKET Electronic Services on September 3, 2024 and sell it today you would earn a total of  144.00  from holding D MARKET Electronic Services or generate 94.12% return on investment over 90 days.

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

D MARKET Electronic Services  vs.  Hour Loop

D MARKET Electronic

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in D MARKET Electronic Services are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, D MARKET unveiled solid returns over the last few months and may actually be approaching a breakup point.

Hour Loop

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hour Loop are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Hour Loop reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with D MARKET and Hour Loop

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

The idea behind D MARKET Electronic Services and Hour Loop 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.