Correlation Between Transimex Transportation and DIC Holdings

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

By analyzing existing cross correlation between Transimex Transportation JSC and DIC Holdings Construction, you can compare the effects of market volatilities on Transimex Transportation and DIC 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 Transimex Transportation with a short position of DIC Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transimex Transportation and DIC Holdings.

Diversification Opportunities for Transimex Transportation and DIC Holdings

-0.69

Correlation Coefficient

Transimex Transportation  DIC Holdings

Excellent diversification

The 3 months correlation between Transimex and DIC is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Transimex Transportation JSC and DIC Holdings Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DIC Holdings Construction and Transimex Transportation 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 Transimex Transportation JSC are associated (or correlated) with DIC Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DIC Holdings Construction has no effect on the direction of Transimex Transportation i.e., Transimex Transportation and DIC Holdings go up and down completely randomly.

Pair Corralation between Transimex Transportation and DIC Holdings

Assuming the 90 days trading horizon Transimex Transportation JSC is expected to generate 0.73 times more return on investment than DIC Holdings. However, Transimex Transportation JSC is 1.37 times less risky than DIC Holdings. It trades about 0.06 of its potential returns per unit of risk. DIC Holdings Construction is currently generating about 0.01 per unit of risk. If you would invest  1,036,904  in Transimex Transportation JSC on September 20, 2024 and sell it today you would earn a total of  693,096  from holding Transimex Transportation JSC or generate 66.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	76.58%
Values	Daily Returns

Transimex Transportation JSC  vs.  DIC Holdings Construction

Transimex Transportation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Transimex Transportation JSC 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 basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

DIC Holdings Construction

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DIC Holdings Construction are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, DIC Holdings displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Transimex Transportation and DIC Holdings

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

The idea behind Transimex Transportation JSC and DIC Holdings Construction 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.