Correlation Between Seafarer Exploration and DLH Holdings

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

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

Diversification Opportunities for Seafarer Exploration and DLH Holdings

0.68

Correlation Coefficient

Seafarer Exploration  DLH Holdings

Poor diversification

The 3 months correlation between Seafarer and DLH is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Seafarer Exploration and DLH Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DLH Holdings Corp and Seafarer Exploration 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 Seafarer Exploration are associated (or correlated) with DLH Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DLH Holdings Corp has no effect on the direction of Seafarer Exploration i.e., Seafarer Exploration and DLH Holdings go up and down completely randomly.

Pair Corralation between Seafarer Exploration and DLH Holdings

Given the investment horizon of 90 days Seafarer Exploration is expected to under-perform the DLH Holdings. In addition to that, Seafarer Exploration is 1.43 times more volatile than DLH Holdings Corp. It trades about -0.08 of its total potential returns per unit of risk. DLH Holdings Corp is currently generating about 0.07 per unit of volatility. If you would invest  760.00  in DLH Holdings Corp on October 12, 2024 and sell it today you would earn a total of  26.00  from holding DLH Holdings Corp or generate 3.42% return on investment over 90 days.

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

Seafarer Exploration  vs.  DLH Holdings Corp

Seafarer Exploration

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Seafarer Exploration has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

DLH Holdings Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DLH Holdings Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Seafarer Exploration and DLH Holdings

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

The idea behind Seafarer Exploration and DLH Holdings Corp 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..