Correlation Between Voya Global and DHCNI

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

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

Diversification Opportunities for Voya Global and DHCNI

0.19

Correlation Coefficient

Voya Global  DHCNI

Average diversification

The 3 months correlation between Voya and DHCNI is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Voya Global Advantage and DHCNI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DHCNI and Voya Global 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 Voya Global Advantage are associated (or correlated) with DHCNI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DHCNI has no effect on the direction of Voya Global i.e., Voya Global and DHCNI go up and down completely randomly.

Pair Corralation between Voya Global and DHCNI

Considering the 90-day investment horizon Voya Global Advantage is expected to generate 0.39 times more return on investment than DHCNI. However, Voya Global Advantage is 2.54 times less risky than DHCNI. It trades about 0.14 of its potential returns per unit of risk. DHCNI is currently generating about 0.04 per unit of risk. If you would invest  706.00  in Voya Global Advantage on December 7, 2024 and sell it today you would earn a total of  257.00  from holding Voya Global Advantage or generate 36.4% return on investment over 90 days.

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

Voya Global Advantage  vs.  DHCNI

Voya Global Advantage

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Global Advantage are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Voya Global is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

DHCNI

Risk-Adjusted Performance

Very Weak

Over the last 90 days DHCNI has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, DHCNI is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Voya Global and DHCNI

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

The idea behind Voya Global Advantage and DHCNI 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.