Correlation Between Dai and Alpha Finance

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Can any of the company-specific risk be diversified away by investing in both Dai and Alpha Finance 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 Dai and Alpha Finance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dai and Alpha Finance Lab, you can compare the effects of market volatilities on Dai and Alpha Finance 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 Dai with a short position of Alpha Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dai and Alpha Finance.

Diversification Opportunities for Dai and Alpha Finance

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Dai and Alpha is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Dai and Alpha Finance Lab in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha Finance Lab and Dai 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 Dai are associated (or correlated) with Alpha Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha Finance Lab has no effect on the direction of Dai i.e., Dai and Alpha Finance go up and down completely randomly.

Pair Corralation between Dai and Alpha Finance

If you would invest  13.00  in Alpha Finance Lab on May 20, 2022 and sell it today you would earn a total of  2.00  from holding Alpha Finance Lab or generate 15.38% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy95.45%
ValuesDaily Returns

Dai  vs.  Alpha Finance Lab

 Performance (%) 
       Timeline  
Dai 
Dai Performance
0 of 100
Over the last 90 days Dai has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Dai is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Dai Price Channel

Alpha Finance Lab 
Alpha Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Alpha Finance Lab are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical indicators, Alpha Finance sustained solid returns over the last few months and may actually be approaching a breakup point.

Alpha Price Channel

Dai and Alpha Finance Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Dai and Alpha Finance

The main advantage of trading using opposite Dai and Alpha Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dai position performs unexpectedly, Alpha Finance 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 Alpha Finance will offset losses from the drop in Alpha Finance's long position.
The idea behind Dai and Alpha Finance Lab 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.
Check out your portfolio center. 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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