Correlation Between Sofwave Medical and YH Dimri

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

By analyzing existing cross correlation between Sofwave Medical and YH Dimri Construction, you can compare the effects of market volatilities on Sofwave Medical and YH Dimri 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 Sofwave Medical with a short position of YH Dimri. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sofwave Medical and YH Dimri.

Diversification Opportunities for Sofwave Medical and YH Dimri

-0.05

Correlation Coefficient

Sofwave Medical  YH Dimri

Good diversification

The 3 months correlation between Sofwave and DIMRI is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Sofwave Medical and YH Dimri Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YH Dimri Construction and Sofwave Medical 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 Sofwave Medical are associated (or correlated) with YH Dimri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YH Dimri Construction has no effect on the direction of Sofwave Medical i.e., Sofwave Medical and YH Dimri go up and down completely randomly.

Pair Corralation between Sofwave Medical and YH Dimri

Assuming the 90 days trading horizon Sofwave Medical is expected to generate 1.21 times less return on investment than YH Dimri. In addition to that, Sofwave Medical is 2.23 times more volatile than YH Dimri Construction. It trades about 0.04 of its total potential returns per unit of risk. YH Dimri Construction is currently generating about 0.1 per unit of volatility. If you would invest  3,541,000  in YH Dimri Construction on September 17, 2024 and sell it today you would earn a total of  78,000  from holding YH Dimri Construction or generate 2.2% return on investment over 90 days.

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

Sofwave Medical  vs.  YH Dimri Construction

Sofwave Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sofwave Medical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Sofwave Medical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

YH Dimri Construction

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in YH Dimri Construction are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, YH Dimri unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sofwave Medical and YH Dimri

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

The idea behind Sofwave Medical and YH Dimri Construction 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.