Correlation Between Silicon Craft and DOHOME

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

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

Diversification Opportunities for Silicon Craft and DOHOME

0.25

Correlation Coefficient

Silicon Craft  DOHOME

Modest diversification

The 3 months correlation between Silicon and DOHOME is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Silicon Craft Technology and DOHOME in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DOHOME and Silicon Craft 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 Silicon Craft Technology are associated (or correlated) with DOHOME. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DOHOME has no effect on the direction of Silicon Craft i.e., Silicon Craft and DOHOME go up and down completely randomly.

Pair Corralation between Silicon Craft and DOHOME

Assuming the 90 days trading horizon Silicon Craft Technology is expected to under-perform the DOHOME. In addition to that, Silicon Craft is 2.02 times more volatile than DOHOME. It trades about -0.07 of its total potential returns per unit of risk. DOHOME is currently generating about -0.09 per unit of volatility. If you would invest  1,110  in DOHOME on September 14, 2024 and sell it today you would lose (125.00) from holding DOHOME or give up 11.26% of portfolio value over 90 days.

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

Silicon Craft Technology  vs.  DOHOME

Silicon Craft Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Silicon Craft Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

DOHOME

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DOHOME has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Silicon Craft and DOHOME

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

The idea behind Silicon Craft Technology and DOHOME 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.