Correlation Between ESGL Holdings and DLH Holdings

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

By analyzing existing cross correlation between ESGL Holdings Limited and DLH Holdings Corp, you can compare the effects of market volatilities on ESGL Holdings and DLH Holdings 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 ESGL Holdings with a short position of DLH Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of ESGL Holdings and DLH Holdings.

Diversification Opportunities for ESGL Holdings and DLH Holdings

-0.56

Correlation Coefficient

ESGL Holdings  DLH Holdings

Excellent diversification

The 3 months correlation between ESGL and DLH is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding ESGL Holdings Limited and DLH Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DLH Holdings Corp and ESGL 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 ESGL Holdings Limited are associated (or correlated) with DLH Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DLH Holdings Corp has no effect on the direction of ESGL Holdings i.e., ESGL Holdings and DLH Holdings go up and down completely randomly.

Pair Corralation between ESGL Holdings and DLH Holdings

Given the investment horizon of 90 days ESGL Holdings Limited is expected to generate 3.34 times more return on investment than DLH Holdings. However, ESGL Holdings is 3.34 times more volatile than DLH Holdings Corp. It trades about 0.21 of its potential returns per unit of risk. DLH Holdings Corp is currently generating about -0.11 per unit of risk. If you would invest  45.00  in ESGL Holdings Limited on March 13, 2024 and sell it today you would earn a total of  59.00  from holding ESGL Holdings Limited or generate 131.11% return on investment over 90 days.

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

ESGL Holdings Limited  vs.  DLH Holdings Corp

ESGL Holdings Limited

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ESGL Holdings Limited are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite weak technical and fundamental indicators, ESGL Holdings disclosed solid returns over the last few months and may actually be approaching a breakup point.

DLH Holdings Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DLH Holdings Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's technical indicators remain rather sound which may send shares a bit higher in July 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with ESGL Holdings and DLH Holdings

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

The idea behind ESGL Holdings Limited and DLH Holdings Corp 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.