Correlation Between Dyadic International and WashTec AG

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

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

Diversification Opportunities for Dyadic International and WashTec AG

0.79

Correlation Coefficient

Dyadic International  WashTec AG

Poor diversification

The 3 months correlation between Dyadic and WashTec is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Dyadic International and WashTec AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WashTec AG and Dyadic International 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 Dyadic International are associated (or correlated) with WashTec AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WashTec AG has no effect on the direction of Dyadic International i.e., Dyadic International and WashTec AG go up and down completely randomly.

Pair Corralation between Dyadic International and WashTec AG

Given the investment horizon of 90 days Dyadic International is expected to generate 1.34 times less return on investment than WashTec AG. In addition to that, Dyadic International is 1.69 times more volatile than WashTec AG. It trades about 0.03 of its total potential returns per unit of risk. WashTec AG is currently generating about 0.08 per unit of volatility. If you would invest  208.00  in WashTec AG on September 24, 2024 and sell it today you would earn a total of  290.00  from holding WashTec AG or generate 139.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Dyadic International  vs.  WashTec AG

Dyadic International

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dyadic International are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Dyadic International demonstrated solid returns over the last few months and may actually be approaching a breakup point.

WashTec AG

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in WashTec AG are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, WashTec AG reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dyadic International and WashTec AG

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

The idea behind Dyadic International and WashTec AG 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.

Check out your portfolio center.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.