Correlation Between Manitou BF and DLSI

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

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

Diversification Opportunities for Manitou BF and DLSI

0.03

Correlation Coefficient

Manitou BF  DLSI

Significant diversification

The 3 months correlation between Manitou and DLSI is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Manitou BF SA and DLSI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DLSI and Manitou BF 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 Manitou BF SA are associated (or correlated) with DLSI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DLSI has no effect on the direction of Manitou BF i.e., Manitou BF and DLSI go up and down completely randomly.

Pair Corralation between Manitou BF and DLSI

Assuming the 90 days trading horizon Manitou BF SA is expected to under-perform the DLSI. In addition to that, Manitou BF is 1.29 times more volatile than DLSI. It trades about -0.08 of its total potential returns per unit of risk. DLSI is currently generating about -0.02 per unit of volatility. If you would invest  1,290  in DLSI on September 14, 2024 and sell it today you would lose (90.00) from holding DLSI or give up 6.98% of portfolio value over 90 days.

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

Manitou BF SA  vs.  DLSI

Manitou BF SA

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Manitou BF SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Manitou BF is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

DLSI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DLSI has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Manitou BF and DLSI

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

The idea behind Manitou BF SA and DLSI 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.