Correlation Between Dyadic International and Equillium

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

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

Diversification Opportunities for Dyadic International and Equillium

0.17

Correlation Coefficient

Dyadic International  Equillium

Average diversification

The 3 months correlation between Dyadic and Equillium is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Dyadic International and Equillium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equillium and Dyadic International 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 Dyadic International are associated (or correlated) with Equillium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equillium has no effect on the direction of Dyadic International i.e., Dyadic International and Equillium go up and down completely randomly.

Pair Corralation between Dyadic International and Equillium

Given the investment horizon of 90 days Dyadic International is expected to generate 0.7 times more return on investment than Equillium. However, Dyadic International is 1.42 times less risky than Equillium. It trades about -0.04 of its potential returns per unit of risk. Equillium is currently generating about -0.09 per unit of risk. If you would invest  158.00  in Dyadic International on January 26, 2024 and sell it today you would lose (8.00) from holding Dyadic International or give up 5.06% of portfolio value over 90 days.

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

Dyadic International  vs.  Equillium

Dyadic International

Risk-Adjusted Performance

4 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dyadic International are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting basic indicators, Dyadic International demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Equillium

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Equillium are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Equillium reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dyadic International and Equillium

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

The idea behind Dyadic International and Equillium 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.