Correlation Between Hooker Furniture and DT Cloud

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

By analyzing existing cross correlation between Hooker Furniture and DT Cloud Star, you can compare the effects of market volatilities on Hooker Furniture and DT Cloud 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 Hooker Furniture with a short position of DT Cloud. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hooker Furniture and DT Cloud.

Diversification Opportunities for Hooker Furniture and DT Cloud

-0.71

Correlation Coefficient

Hooker Furniture  DT Cloud

Pay attention - limited upside

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

Pair Corralation between Hooker Furniture and DT Cloud

Given the investment horizon of 90 days Hooker Furniture is expected to under-perform the DT Cloud. In addition to that, Hooker Furniture is 17.55 times more volatile than DT Cloud Star. It trades about -0.06 of its total potential returns per unit of risk. DT Cloud Star is currently generating about 0.05 per unit of volatility. If you would invest  1,011  in DT Cloud Star on October 26, 2024 and sell it today you would earn a total of  1.00  from holding DT Cloud Star or generate 0.1% return on investment over 90 days.

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

Hooker Furniture  vs.  DT Cloud Star

Hooker Furniture

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hooker Furniture 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 technical and fundamental 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.

DT Cloud Star

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DT Cloud Star are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, DT Cloud is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Hooker Furniture and DT Cloud

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

The idea behind Hooker Furniture and DT Cloud Star 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.