Correlation Between CoreShares Preference and Discovery Holdings

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

By analyzing existing cross correlation between CoreShares Preference Share and Discovery Holdings, you can compare the effects of market volatilities on CoreShares Preference and Discovery Holdings 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 CoreShares Preference with a short position of Discovery Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of CoreShares Preference and Discovery Holdings.

Diversification Opportunities for CoreShares Preference and Discovery Holdings

0.0

Correlation Coefficient

CoreShares Preference  Discovery Holdings

Pay attention - limited upside

The 3 months correlation between CoreShares and Discovery is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CoreShares Preference Share and Discovery Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Discovery Holdings and CoreShares Preference 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 CoreShares Preference Share are associated (or correlated) with Discovery Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Discovery Holdings has no effect on the direction of CoreShares Preference i.e., CoreShares Preference and Discovery Holdings go up and down completely randomly.

Pair Corralation between CoreShares Preference and Discovery Holdings

If you would invest  1,709,621  in Discovery Holdings on October 12, 2024 and sell it today you would earn a total of  214,979  from holding Discovery Holdings or generate 12.57% return on investment over 90 days.

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

CoreShares Preference Share  vs.  Discovery Holdings

CoreShares Preference

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CoreShares Preference Share has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, CoreShares Preference is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Discovery Holdings

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Discovery Holdings are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Discovery Holdings may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with CoreShares Preference and Discovery Holdings

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

The idea behind CoreShares Preference Share and Discovery Holdings 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.