Correlation Between Investment Trust and Dhunseri Investments

Can any of the company-specific risk be diversified away by investing in both Investment Trust and Dhunseri Investments 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 Dhunseri Investments 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 Dhunseri Investments Limited, you can compare the effects of market volatilities on Investment Trust and Dhunseri Investments 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 Dhunseri Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investment Trust and Dhunseri Investments.

Diversification Opportunities for Investment Trust and Dhunseri Investments

0.76

Correlation Coefficient

Investment Trust  Dhunseri Investments

Poor diversification

The 3 months correlation between Investment and Dhunseri is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding The Investment Trust and Dhunseri Investments Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dhunseri Investments 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 Dhunseri Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dhunseri Investments has no effect on the direction of Investment Trust i.e., Investment Trust and Dhunseri Investments go up and down completely randomly.

Pair Corralation between Investment Trust and Dhunseri Investments

Assuming the 90 days trading horizon The Investment Trust is expected to generate 0.84 times more return on investment than Dhunseri Investments. However, The Investment Trust is 1.18 times less risky than Dhunseri Investments. It trades about -0.08 of its potential returns per unit of risk. Dhunseri Investments Limited is currently generating about -0.1 per unit of risk. If you would invest  20,448  in The Investment Trust on October 22, 2024 and sell it today you would lose (2,985) from holding The Investment Trust or give up 14.6% of portfolio value over 90 days.

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

The Investment Trust  vs.  Dhunseri Investments Limited

Investment Trust

Risk-Adjusted Performance

0 of 100

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 unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Dhunseri Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dhunseri Investments Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's forward indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Investment Trust and Dhunseri Investments

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

The idea behind The Investment Trust and Dhunseri Investments 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.