Correlation Between Sage Group and Dubber

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

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

Diversification Opportunities for Sage Group and Dubber

0.07

Correlation Coefficient

Sage Group  Dubber

Significant diversification

The 3 months correlation between Sage and Dubber is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Sage Group PLC and Dubber Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dubber Limited and Sage Group 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 Sage Group PLC are associated (or correlated) with Dubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dubber Limited has no effect on the direction of Sage Group i.e., Sage Group and Dubber go up and down completely randomly.

Pair Corralation between Sage Group and Dubber

Assuming the 90 days horizon Sage Group PLC is expected to under-perform the Dubber. But the pink sheet apears to be less risky and, when comparing its historical volatility, Sage Group PLC is 114.06 times less risky than Dubber. The pink sheet trades about -0.05 of its potential returns per unit of risk. The Dubber Limited is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  2.50  in Dubber Limited on December 21, 2024 and sell it today you would earn a total of  1.87  from holding Dubber Limited or generate 74.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	93.65%
Values	Daily Returns

Sage Group PLC  vs.  Dubber Limited

Sage Group PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sage Group PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Sage Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Dubber Limited

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dubber Limited are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Dubber reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sage Group and Dubber

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

The idea behind Sage Group PLC and Dubber Limited 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.