Correlation Between Deep Down and Dawson Geophysical

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

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

Diversification Opportunities for Deep Down and Dawson Geophysical

0.11

Correlation Coefficient

Deep Down  Dawson Geophysical

Average diversification

The 3 months correlation between Deep and Dawson is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Deep Down and Dawson Geophysical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dawson Geophysical and Deep Down 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 Deep Down are associated (or correlated) with Dawson Geophysical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dawson Geophysical has no effect on the direction of Deep Down i.e., Deep Down and Dawson Geophysical go up and down completely randomly.

Pair Corralation between Deep Down and Dawson Geophysical

If you would invest  123.00  in Dawson Geophysical on January 25, 2024 and sell it today you would earn a total of  40.00  from holding Dawson Geophysical or generate 32.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	4.76%
Values	Daily Returns

Deep Down  vs.  Dawson Geophysical

Deep Down

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Deep Down has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, Deep Down is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Dawson Geophysical

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Dawson Geophysical are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Dawson Geophysical displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Deep Down and Dawson Geophysical

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

The idea behind Deep Down and Dawson Geophysical 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.