Correlation Between Hive and DL Industries

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

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

Diversification Opportunities for Hive and DL Industries

0.0

Correlation Coefficient

Hive  DL Industries

Pay attention - limited upside

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

Pair Corralation between Hive and DL Industries

Assuming the 90 days trading horizon Hive is expected to generate 1.87 times more return on investment than DL Industries. However, Hive is 1.87 times more volatile than DL Industries ADR. It trades about 0.05 of its potential returns per unit of risk. DL Industries ADR is currently generating about -0.04 per unit of risk. If you would invest  31.00  in Hive on January 25, 2024 and sell it today you would earn a total of  3.00  from holding Hive or generate 9.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

Hive  vs.  DL Industries ADR

Hive

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hive are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Hive exhibited solid returns over the last few months and may actually be approaching a breakup point.

DL Industries ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DL Industries ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Hive and DL Industries

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

The idea behind Hive and DL Industries ADR 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.