Correlation Between Hiru and DNA Brands

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

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

Diversification Opportunities for Hiru and DNA Brands

0.04

Correlation Coefficient

Hiru  DNA Brands

Significant diversification

The 3 months correlation between Hiru and DNA is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Hiru Corp. and DNA Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DNA Brands and Hiru 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 Hiru Corporation are associated (or correlated) with DNA Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DNA Brands has no effect on the direction of Hiru i.e., Hiru and DNA Brands go up and down completely randomly.

Pair Corralation between Hiru and DNA Brands

Given the investment horizon of 90 days Hiru Corporation is expected to under-perform the DNA Brands. But the pink sheet apears to be less risky and, when comparing its historical volatility, Hiru Corporation is 27.55 times less risky than DNA Brands. The pink sheet trades about -0.19 of its potential returns per unit of risk. The DNA Brands is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  0.02  in DNA Brands on October 22, 2024 and sell it today you would earn a total of  0.00  from holding DNA Brands or generate 0.0% return on investment over 90 days.

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

Hiru Corp.  vs.  DNA Brands

Hiru

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hiru Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

DNA Brands

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in DNA Brands are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, DNA Brands showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hiru and DNA Brands

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

The idea behind Hiru Corporation and DNA Brands 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.