Correlation Between Dragonfly and Cytogen

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

Diversification Opportunities for Dragonfly and Cytogen

-0.48

Correlation Coefficient

Dragonfly  Cytogen

Very good diversification

The 3 months correlation between Dragonfly and Cytogen is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Dragonfly GF Co and Cytogen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cytogen 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 Cytogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cytogen has no effect on the direction of Dragonfly i.e., Dragonfly and Cytogen go up and down completely randomly.

Pair Corralation between Dragonfly and Cytogen

Assuming the 90 days trading horizon Dragonfly GF Co is expected to generate 18.38 times more return on investment than Cytogen. However, Dragonfly is 18.38 times more volatile than Cytogen. It trades about 0.09 of its potential returns per unit of risk. Cytogen is currently generating about -0.03 per unit of risk. If you would invest  231,000  in Dragonfly GF Co on August 31, 2024 and sell it today you would lose (114,500) from holding Dragonfly GF Co or give up 49.57% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	76.27%
Values	Daily Returns

Dragonfly GF Co  vs.  Cytogen

Dragonfly GF

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Dragonfly GF Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat weak basic indicators, Dragonfly sustained solid returns over the last few months and may actually be approaching a breakup point.

Cytogen

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Dragonfly and Cytogen

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

The idea behind Dragonfly GF Co and Cytogen 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.