Correlation Between Direct Communication and ASGN

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

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

Diversification Opportunities for Direct Communication and ASGN

0.07

Correlation Coefficient

Direct Communication  ASGN

Significant diversification

The 3 months correlation between Direct and ASGN is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Direct Communication Solutions and ASGN Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASGN Inc and Direct Communication 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 Direct Communication Solutions are associated (or correlated) with ASGN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASGN Inc has no effect on the direction of Direct Communication i.e., Direct Communication and ASGN go up and down completely randomly.

Pair Corralation between Direct Communication and ASGN

Given the investment horizon of 90 days Direct Communication Solutions is expected to generate 2.6 times more return on investment than ASGN. However, Direct Communication is 2.6 times more volatile than ASGN Inc. It trades about 0.16 of its potential returns per unit of risk. ASGN Inc is currently generating about 0.0 per unit of risk. If you would invest  77.00  in Direct Communication Solutions on September 3, 2024 and sell it today you would earn a total of  129.00  from holding Direct Communication Solutions or generate 167.53% return on investment over 90 days.

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

Direct Communication Solutions  vs.  ASGN Inc

Direct Communication

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Direct Communication Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Direct Communication is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

ASGN Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ASGN Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, ASGN is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Direct Communication and ASGN

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

The idea behind Direct Communication Solutions and ASGN Inc 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.