Correlation Between Domo and DHI

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

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

Diversification Opportunities for Domo and DHI

0.16

Correlation Coefficient

Domo  DHI

Average diversification

The 3 months correlation between Domo and DHI is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Domo Inc and DHI Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DHI Group and Domo 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 Domo Inc are associated (or correlated) with DHI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DHI Group has no effect on the direction of Domo i.e., Domo and DHI go up and down completely randomly.

Pair Corralation between Domo and DHI

Given the investment horizon of 90 days Domo is expected to generate 1.14 times less return on investment than DHI. In addition to that, Domo is 1.13 times more volatile than DHI Group. It trades about 0.04 of its total potential returns per unit of risk. DHI Group is currently generating about 0.05 per unit of volatility. If you would invest  162.00  in DHI Group on September 13, 2024 and sell it today you would earn a total of  11.00  from holding DHI Group or generate 6.79% return on investment over 90 days.

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

Domo Inc  vs.  DHI Group

Domo Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Domo Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain primary indicators, Domo may actually be approaching a critical reversion point that can send shares even higher in January 2025.

DHI Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in DHI Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical indicators, DHI may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Domo and DHI

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

The idea behind Domo Inc and DHI Group 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.