Correlation Between Advanced Human and Dave

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

By analyzing existing cross correlation between Advanced Human Imaging and Dave Inc, you can compare the effects of market volatilities on Advanced Human and Dave 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 Advanced Human with a short position of Dave. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Human and Dave.

Diversification Opportunities for Advanced Human and Dave

0.8

Correlation Coefficient

Advanced Human Dave

Very poor diversification

The 3 months correlation between Advanced and Dave is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Human Imaging and Dave Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dave Inc and Advanced Human 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 Advanced Human Imaging are associated (or correlated) with Dave. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dave Inc has no effect on the direction of Advanced Human i.e., Advanced Human and Dave go up and down completely randomly.

Pair Corralation between Advanced Human and Dave

Considering the 90-day investment horizon Advanced Human Imaging is expected to generate 1.53 times more return on investment than Dave. However, Advanced Human is 1.53 times more volatile than Dave Inc. It trades about 0.0 of its potential returns per unit of risk. Dave Inc is currently generating about -0.13 per unit of risk. If you would invest  40.00  in Advanced Human Imaging on March 3, 2023 and sell it today you would lose (8.00)  from holding Advanced Human Imaging or give up 20.0% of portfolio value over 90 days.

Advanced Human Imaging  vs.  Dave Inc

Advanced Human Imaging

Advanced Performance

0 of 100

Over the last 90 days Advanced Human Imaging has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in July 2023. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Dave Inc

Dave Performance

0 of 100

Over the last 90 days Dave Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in July 2023. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Advanced Human and Dave

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

The idea behind Advanced Human Imaging and Dave Inc 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 Global Correlations module to find global opportunities by holding instruments from different markets.