Correlation Between Dowa Holdings and Under Armour

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

Diversification Opportunities for Dowa Holdings and Under Armour

-0.27
  Correlation Coefficient

Very good diversification

The 3 months correlation between DWMNF and Under is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Dowa Holdings and Under Armour Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Under Armour and Dowa Holdings 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 Dowa Holdings are associated (or correlated) with Under Armour. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Under Armour has no effect on the direction of Dowa Holdings i.e., Dowa Holdings and Under Armour go up and down completely randomly.

Pair Corralation between Dowa Holdings and Under Armour

Assuming the 90 days horizon Dowa Holdings is expected to generate 2.56 times more return on investment than Under Armour. However, Dowa Holdings is 2.56 times more volatile than Under Armour. It trades about 0.03 of its potential returns per unit of risk. Under Armour is currently generating about -0.02 per unit of risk. If you would invest  2,825  in Dowa Holdings on September 1, 2022 and sell it today you would earn a total of  250.00  from holding Dowa Holdings or generate 8.85% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy99.8%
ValuesDaily Returns

Dowa Holdings  vs.  Under Armour Inc

 Performance (%) 
       Timeline  
Dowa Holdings 
DWMNF Performance
0 of 100
Over the last 90 days Dowa Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in December 2022. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

DWMNF Price Channel

Under Armour 
Under Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Under Armour are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Under Armour sustained solid returns over the last few months and may actually be approaching a breakup point.

Under Price Channel

Dowa Holdings and Under Armour Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Dowa Holdings and Under Armour

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