Correlation Between Morningstar Unconstrained and Dah Sing

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

By analyzing existing cross correlation between Morningstar Unconstrained Allocation and Dah Sing Financial, you can compare the effects of market volatilities on Morningstar Unconstrained and Dah Sing 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 Morningstar Unconstrained with a short position of Dah Sing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morningstar Unconstrained and Dah Sing.

Diversification Opportunities for Morningstar Unconstrained and Dah Sing

-0.06

Correlation Coefficient

Morningstar Unconstrained  Dah Sing

Good diversification

The 3 months correlation between Morningstar and Dah is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Morningstar Unconstrained Allo and Dah Sing Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dah Sing Financial and Morningstar Unconstrained 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 Morningstar Unconstrained Allocation are associated (or correlated) with Dah Sing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dah Sing Financial has no effect on the direction of Morningstar Unconstrained i.e., Morningstar Unconstrained and Dah Sing go up and down completely randomly.

Pair Corralation between Morningstar Unconstrained and Dah Sing

Assuming the 90 days horizon Morningstar Unconstrained is expected to generate 4.11 times less return on investment than Dah Sing. But when comparing it to its historical volatility, Morningstar Unconstrained Allocation is 2.79 times less risky than Dah Sing. It trades about 0.06 of its potential returns per unit of risk. Dah Sing Financial is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  629.00  in Dah Sing Financial on December 5, 2024 and sell it today you would earn a total of  498.00  from holding Dah Sing Financial or generate 79.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	75.46%
Values	Daily Returns

Morningstar Unconstrained Allo  vs.  Dah Sing Financial

Morningstar Unconstrained

Risk-Adjusted Performance

Very Weak

Over the last 90 days Morningstar Unconstrained Allocation has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Dah Sing Financial

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Dah Sing Financial are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Dah Sing showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Morningstar Unconstrained and Dah Sing

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

The idea behind Morningstar Unconstrained Allocation and Dah Sing Financial 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.