Correlation Between Investment Trust and DCM Financial

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

By analyzing existing cross correlation between The Investment Trust and DCM Financial Services, you can compare the effects of market volatilities on Investment Trust and DCM Financial 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 Investment Trust with a short position of DCM Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investment Trust and DCM Financial.

Diversification Opportunities for Investment Trust and DCM Financial

0.96

Correlation Coefficient

Investment Trust  DCM Financial

Almost no diversification

The 3 months correlation between Investment and DCM is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding The Investment Trust and DCM Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DCM Financial Services and Investment Trust 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 The Investment Trust are associated (or correlated) with DCM Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DCM Financial Services has no effect on the direction of Investment Trust i.e., Investment Trust and DCM Financial go up and down completely randomly.

Pair Corralation between Investment Trust and DCM Financial

Assuming the 90 days trading horizon The Investment Trust is expected to under-perform the DCM Financial. In addition to that, Investment Trust is 1.26 times more volatile than DCM Financial Services. It trades about -0.28 of its total potential returns per unit of risk. DCM Financial Services is currently generating about -0.26 per unit of volatility. If you would invest  756.00  in DCM Financial Services on December 28, 2024 and sell it today you would lose (231.00) from holding DCM Financial Services or give up 30.56% of portfolio value over 90 days.

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

The Investment Trust  vs.  DCM Financial Services

Investment Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Investment Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

DCM Financial Services

Risk-Adjusted Performance

Very Weak

Over the last 90 days DCM Financial Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Investment Trust and DCM Financial

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

The idea behind The Investment Trust and DCM Financial Services 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.