Correlation Between ReTo Eco and Dana

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

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

Diversification Opportunities for ReTo Eco and Dana

0.09

Correlation Coefficient

ReTo Eco  Dana

Significant diversification

The 3 months correlation between ReTo and Dana is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding ReTo Eco Solutions and Dana Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dana Inc and ReTo Eco 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 ReTo Eco Solutions are associated (or correlated) with Dana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dana Inc has no effect on the direction of ReTo Eco i.e., ReTo Eco and Dana go up and down completely randomly.

Pair Corralation between ReTo Eco and Dana

Given the investment horizon of 90 days ReTo Eco Solutions is expected to under-perform the Dana. But the stock apears to be less risky and, when comparing its historical volatility, ReTo Eco Solutions is 1.02 times less risky than Dana. The stock trades about -0.03 of its potential returns per unit of risk. The Dana Inc is currently generating about 0.45 of returns per unit of risk over similar time horizon. If you would invest  858.00  in Dana Inc on September 13, 2024 and sell it today you would earn a total of  394.00  from holding Dana Inc or generate 45.92% return on investment over 90 days.

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

ReTo Eco Solutions  vs.  Dana Inc

ReTo Eco Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ReTo Eco Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Dana Inc

Risk-Adjusted Performance

9 of 100

OK

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

Pair Trading with ReTo Eco and Dana

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

The idea behind ReTo Eco Solutions and Dana Inc 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.