Correlation Between Raise Production and Deep Down

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

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

Diversification Opportunities for Raise Production and Deep Down

0.0

Correlation Coefficient

Raise Production  Deep Down

Pay attention - limited upside

The 3 months correlation between Raise and Deep is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Raise Production and Deep Down in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deep Down and Raise Production 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 Raise Production are associated (or correlated) with Deep Down. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deep Down has no effect on the direction of Raise Production i.e., Raise Production and Deep Down go up and down completely randomly.

Pair Corralation between Raise Production and Deep Down

Assuming the 90 days horizon Raise Production is expected to generate 2.0 times more return on investment than Deep Down. However, Raise Production is 2.0 times more volatile than Deep Down. It trades about 0.01 of its potential returns per unit of risk. Deep Down is currently generating about -0.01 per unit of risk. If you would invest  63.00  in Raise Production on January 25, 2024 and sell it today you would lose (51.00) from holding Raise Production or give up 80.95% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	37.65%
Values	Daily Returns

Raise Production  vs.  Deep Down

Raise Production

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Raise Production has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Raise Production is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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.

Pair Trading with Raise Production and Deep Down

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

The idea behind Raise Production and Deep Down 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 the Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.