Correlation Between Raise Production and Dawson Geophysical

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

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

Diversification Opportunities for Raise Production and Dawson Geophysical

0.0

Correlation Coefficient

Raise Production  Dawson Geophysical

Pay attention - limited upside

The 3 months correlation between Raise and Dawson is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Raise Production and Dawson Geophysical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dawson Geophysical 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 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 Raise Production i.e., Raise Production and Dawson Geophysical go up and down completely randomly.

Pair Corralation between Raise Production and Dawson Geophysical

Assuming the 90 days horizon Raise Production is expected to generate 2.84 times less return on investment than Dawson Geophysical. In addition to that, Raise Production is 1.05 times more volatile than Dawson Geophysical. It trades about 0.01 of its total potential returns per unit of risk. Dawson Geophysical is currently generating about 0.04 per unit of volatility. If you would invest  151.00  in Dawson Geophysical on January 20, 2024 and sell it today you would earn a total of  17.00  from holding Dawson Geophysical or generate 11.26% return on investment over 90 days.

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

Raise Production  vs.  Dawson Geophysical

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 recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Dawson Geophysical

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dawson Geophysical are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Dawson Geophysical displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Raise Production and Dawson Geophysical

The main advantage of trading using opposite Raise Production and Dawson Geophysical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Raise Production 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 Raise Production 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.