Correlation Between Aisin and Dorman Products

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

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

Diversification Opportunities for Aisin and Dorman Products

0.0

Correlation Coefficient

Aisin  Dorman Products

Pay attention - limited upside

The 3 months correlation between Aisin and Dorman is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Aisin and Dorman Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dorman Products and Aisin 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 Aisin are associated (or correlated) with Dorman Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dorman Products has no effect on the direction of Aisin i.e., Aisin and Dorman Products go up and down completely randomly.

Pair Corralation between Aisin and Dorman Products

If you would invest  13,373  in Dorman Products on September 5, 2024 and sell it today you would earn a total of  623.00  from holding Dorman Products or generate 4.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	4.55%
Values	Daily Returns

Aisin  vs.  Dorman Products

Aisin

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aisin has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward-looking signals, Aisin is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Dorman Products

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dorman Products are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Dorman Products displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aisin and Dorman Products

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

The idea behind Aisin and Dorman Products 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.