Correlation Between Nasdaq and DMCI Holdings

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

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

Diversification Opportunities for Nasdaq and DMCI Holdings

-0.71

Correlation Coefficient

Nasdaq  DMCI Holdings

Pay attention - limited upside

The 3 months correlation between Nasdaq and DMCI is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and DMCI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DMCI Holdings and Nasdaq 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 Nasdaq Inc are associated (or correlated) with DMCI Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DMCI Holdings has no effect on the direction of Nasdaq i.e., Nasdaq and DMCI Holdings go up and down completely randomly.

Pair Corralation between Nasdaq and DMCI Holdings

Given the investment horizon of 90 days Nasdaq Inc is expected to under-perform the DMCI Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Nasdaq Inc is 1.23 times less risky than DMCI Holdings. The stock trades about -0.13 of its potential returns per unit of risk. The DMCI Holdings is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  1,072  in DMCI Holdings on September 25, 2024 and sell it today you would lose (20.00) from holding DMCI Holdings or give up 1.87% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Nasdaq Inc  vs.  DMCI Holdings

Nasdaq Inc

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Nasdaq may actually be approaching a critical reversion point that can send shares even higher in January 2025.

DMCI Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DMCI Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, DMCI Holdings is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Nasdaq and DMCI Holdings

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

The idea behind Nasdaq Inc and DMCI Holdings 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.