Correlation Between Open Network and DENT

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

By analyzing existing cross correlation between The Open Network and DENT, you can compare the effects of market volatilities on Open Network and DENT 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 Open Network with a short position of DENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Open Network and DENT.

Diversification Opportunities for Open Network and DENT

-0.28

Correlation Coefficient

Open Network  DENT

Very good diversification

The 3 months correlation between Open and DENT is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding The Open Network and DENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DENT and Open Network 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 The Open Network are associated (or correlated) with DENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DENT has no effect on the direction of Open Network i.e., Open Network and DENT go up and down completely randomly.

Pair Corralation between Open Network and DENT

Assuming the 90 days trading horizon The Open Network is expected to generate 1.23 times more return on investment than DENT. However, Open Network is 1.23 times more volatile than DENT. It trades about 0.13 of its potential returns per unit of risk. DENT is currently generating about -0.06 per unit of risk. If you would invest  616.00  in The Open Network on February 16, 2024 and sell it today you would earn a total of  72.00  from holding The Open Network or generate 11.69% return on investment over 90 days.

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

The Open Network  vs.  DENT

Open Network

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in The Open Network are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Open Network displayed solid returns over the last few months and may actually be approaching a breakup point.

DENT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DENT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, DENT is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Open Network and DENT

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

The idea behind The Open Network and DENT 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.