Correlation Between Meridianlink and Duos Technologies

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

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

Diversification Opportunities for Meridianlink and Duos Technologies

0.19

Correlation Coefficient

Meridianlink  Duos Technologies

Average diversification

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

Pair Corralation between Meridianlink and Duos Technologies

Given the investment horizon of 90 days Meridianlink is expected to generate 220.88 times less return on investment than Duos Technologies. But when comparing it to its historical volatility, Meridianlink is 3.14 times less risky than Duos Technologies. It trades about 0.0 of its potential returns per unit of risk. Duos Technologies Group is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  240.00  in Duos Technologies Group on September 12, 2024 and sell it today you would earn a total of  200.00  from holding Duos Technologies Group or generate 83.33% return on investment over 90 days.

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

Meridianlink  vs.  Duos Technologies Group

Meridianlink

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Meridianlink has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Meridianlink is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Duos Technologies

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Duos Technologies Group are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Duos Technologies unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Meridianlink and Duos Technologies

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

The idea behind Meridianlink and Duos Technologies 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.

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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.