Correlation Between Dragonfly and IDIS Holdings

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

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

Diversification Opportunities for Dragonfly and IDIS Holdings

0.75

Correlation Coefficient

Dragonfly  IDIS Holdings

Poor diversification

The 3 months correlation between Dragonfly and IDIS is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Dragonfly GF Co and IDIS Holdings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IDIS Holdings and Dragonfly 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 Dragonfly GF Co are associated (or correlated) with IDIS Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IDIS Holdings has no effect on the direction of Dragonfly i.e., Dragonfly and IDIS Holdings go up and down completely randomly.

Pair Corralation between Dragonfly and IDIS Holdings

Assuming the 90 days trading horizon Dragonfly GF Co is expected to under-perform the IDIS Holdings. In addition to that, Dragonfly is 5.18 times more volatile than IDIS Holdings Co. It trades about -0.3 of its total potential returns per unit of risk. IDIS Holdings Co is currently generating about -0.14 per unit of volatility. If you would invest  979,000  in IDIS Holdings Co on September 3, 2024 and sell it today you would lose (82,000) from holding IDIS Holdings Co or give up 8.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	74.58%
Values	Daily Returns

Dragonfly GF Co  vs.  IDIS Holdings Co

Dragonfly GF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dragonfly GF Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

IDIS Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IDIS Holdings Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Dragonfly and IDIS Holdings

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

The idea behind Dragonfly GF Co and IDIS Holdings Co 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.