Correlation Between DANBNK and Valens

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

By analyzing existing cross correlation between DANBNK 6466 09 JAN 26 and Valens, you can compare the effects of market volatilities on DANBNK and Valens 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 DANBNK with a short position of Valens. Check out your portfolio center. Please also check ongoing floating volatility patterns of DANBNK and Valens.

Diversification Opportunities for DANBNK and Valens

-0.12

Correlation Coefficient

DANBNK  Valens

Good diversification

The 3 months correlation between DANBNK and Valens is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding DANBNK 6466 09 JAN 26 and Valens in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valens and DANBNK 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 DANBNK 6466 09 JAN 26 are associated (or correlated) with Valens. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valens has no effect on the direction of DANBNK i.e., DANBNK and Valens go up and down completely randomly.

Pair Corralation between DANBNK and Valens

Assuming the 90 days trading horizon DANBNK is expected to generate 24.1 times less return on investment than Valens. But when comparing it to its historical volatility, DANBNK 6466 09 JAN 26 is 19.49 times less risky than Valens. It trades about 0.02 of its potential returns per unit of risk. Valens is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  209.00  in Valens on September 14, 2024 and sell it today you would earn a total of  4.00  from holding Valens or generate 1.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	37.92%
Values	Daily Returns

DANBNK 6466 09 JAN 26  vs.  Valens

DANBNK 6466 09

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DANBNK 6466 09 JAN 26 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, DANBNK is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Valens

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Valens has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, Valens is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with DANBNK and Valens

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

The idea behind DANBNK 6466 09 JAN 26 and Valens 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.