Correlation Between Risk George and Dragon Capital

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

By analyzing existing cross correlation between Risk George Inds and Dragon Capital Grp, you can compare the effects of market volatilities on Risk George and Dragon Capital 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 Risk George with a short position of Dragon Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Risk George and Dragon Capital.

Diversification Opportunities for Risk George and Dragon Capital

0.2

Correlation Coefficient

Risk George  Dragon Capital

Modest diversification

The 3 months correlation between Risk and Dragon is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Risk George Inds and Dragon Capital Grp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dragon Capital Grp and Risk George 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 Risk George Inds are associated (or correlated) with Dragon Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dragon Capital Grp has no effect on the direction of Risk George i.e., Risk George and Dragon Capital go up and down completely randomly.

Pair Corralation between Risk George and Dragon Capital

Assuming the 90 days horizon Risk George is expected to generate 14.78 times less return on investment than Dragon Capital. But when comparing it to its historical volatility, Risk George Inds is 10.16 times less risky than Dragon Capital. It trades about 0.1 of its potential returns per unit of risk. Dragon Capital Grp is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  0.02  in Dragon Capital Grp on September 29, 2024 and sell it today you would earn a total of  0.00  from holding Dragon Capital Grp or generate 0.0% return on investment over 90 days.

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

Risk George Inds  vs.  Dragon Capital Grp

Risk George Inds

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Risk George Inds are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal forward indicators, Risk George may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Dragon Capital Grp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dragon Capital Grp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Dragon Capital showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Risk George and Dragon Capital

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

The idea behind Risk George Inds and Dragon Capital Grp 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.