Correlation Between Dakshidin and Centr Brands

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

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

Diversification Opportunities for Dakshidin and Centr Brands

-0.19

Correlation Coefficient

Dakshidin  Centr Brands

Good diversification

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

Pair Corralation between Dakshidin and Centr Brands

Given the investment horizon of 90 days Dakshidin Corporation is expected to generate 0.46 times more return on investment than Centr Brands. However, Dakshidin Corporation is 2.18 times less risky than Centr Brands. It trades about 0.12 of its potential returns per unit of risk. Centr Brands Corp is currently generating about 0.03 per unit of risk. If you would invest  0.08  in Dakshidin Corporation on September 17, 2024 and sell it today you would earn a total of  0.05  from holding Dakshidin Corporation or generate 62.5% return on investment over 90 days.

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

Dakshidin Corp.  vs.  Centr Brands Corp

Dakshidin

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dakshidin Corporation are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Dakshidin exhibited solid returns over the last few months and may actually be approaching a breakup point.

Centr Brands Corp

Risk-Adjusted Performance

2 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Centr Brands Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Centr Brands reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dakshidin and Centr Brands

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

The idea behind Dakshidin Corporation and Centr Brands 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.