Correlation Between Definity Financial and Damara Gold

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

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

Diversification Opportunities for Definity Financial and Damara Gold

0.0

Correlation Coefficient

Definity Financial  Damara Gold

Pay attention - limited upside

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

Pair Corralation between Definity Financial and Damara Gold

If you would invest  3,622  in Definity Financial Corp on September 29, 2024 and sell it today you would earn a total of  2,201  from holding Definity Financial Corp or generate 60.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Definity Financial Corp  vs.  Damara Gold Corp

Definity Financial Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Definity Financial Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Definity Financial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Damara Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Damara Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable primary indicators, Damara Gold is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Definity Financial and Damara Gold

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

The idea behind Definity Financial Corp and Damara Gold Corp 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.