Correlation Between DHI and Amplitude

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

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

Diversification Opportunities for DHI and Amplitude

0.27

Correlation Coefficient

DHI  Amplitude

Modest diversification

The 3 months correlation between DHI and Amplitude is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding DHI Group and Amplitude in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amplitude and DHI 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 DHI Group are associated (or correlated) with Amplitude. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amplitude has no effect on the direction of DHI i.e., DHI and Amplitude go up and down completely randomly.

Pair Corralation between DHI and Amplitude

Considering the 90-day investment horizon DHI is expected to generate 2.75 times less return on investment than Amplitude. In addition to that, DHI is 1.04 times more volatile than Amplitude. It trades about 0.06 of its total potential returns per unit of risk. Amplitude is currently generating about 0.17 per unit of volatility. If you would invest  900.00  in Amplitude on September 23, 2024 and sell it today you would earn a total of  201.00  from holding Amplitude or generate 22.33% return on investment over 90 days.

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

DHI Group  vs.  Amplitude

DHI Group

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in DHI Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal technical indicators, DHI showed solid returns over the last few months and may actually be approaching a breakup point.

Amplitude

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Amplitude are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite abnormal basic indicators, Amplitude disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DHI and Amplitude

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

The idea behind DHI Group and Amplitude 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .