Correlation Between Distoken Acquisition and Regional Management

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Can any of the company-specific risk be diversified away by investing in both Distoken Acquisition and Regional Management 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 Distoken Acquisition and Regional Management into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Distoken Acquisition and Regional Management Corp, you can compare the effects of market volatilities on Distoken Acquisition and Regional Management 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 Distoken Acquisition with a short position of Regional Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Distoken Acquisition and Regional Management.

Diversification Opportunities for Distoken Acquisition and Regional Management

-0.19
  Correlation Coefficient

Good diversification

The 3 months correlation between Distoken and Regional is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Distoken Acquisition and Regional Management Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regional Management Corp and Distoken Acquisition 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 Distoken Acquisition are associated (or correlated) with Regional Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regional Management Corp has no effect on the direction of Distoken Acquisition i.e., Distoken Acquisition and Regional Management go up and down completely randomly.

Pair Corralation between Distoken Acquisition and Regional Management

Assuming the 90 days horizon Distoken Acquisition is expected to generate 3.79 times more return on investment than Regional Management. However, Distoken Acquisition is 3.79 times more volatile than Regional Management Corp. It trades about 0.05 of its potential returns per unit of risk. Regional Management Corp is currently generating about -0.02 per unit of risk. If you would invest  11.00  in Distoken Acquisition on September 1, 2024 and sell it today you would earn a total of  0.00  from holding Distoken Acquisition or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy19.05%
ValuesDaily Returns

Distoken Acquisition  vs.  Regional Management Corp

 Performance 
       Timeline  
Distoken Acquisition 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Insignificant
Over the last 90 days Distoken Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively weak basic indicators, Distoken Acquisition reported solid returns over the last few months and may actually be approaching a breakup point.
Regional Management Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Regional Management Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Regional Management is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Distoken Acquisition and Regional Management Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Distoken Acquisition and Regional Management

The main advantage of trading using opposite Distoken Acquisition and Regional Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Distoken Acquisition position performs unexpectedly, Regional Management 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 Regional Management will offset losses from the drop in Regional Management's long position.
The idea behind Distoken Acquisition and Regional Management 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.

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