Correlation Between GEE and DLH Holdings

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

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

Diversification Opportunities for GEE and DLH Holdings

0.78

Correlation Coefficient

GEE  DLH Holdings

Poor diversification

The 3 months correlation between GEE and DLH is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding GEE Group and DLH Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DLH Holdings Corp and GEE 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 GEE Group are associated (or correlated) with DLH Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DLH Holdings Corp has no effect on the direction of GEE i.e., GEE and DLH Holdings go up and down completely randomly.

Pair Corralation between GEE and DLH Holdings

Considering the 90-day investment horizon GEE Group is expected to generate 0.9 times more return on investment than DLH Holdings. However, GEE Group is 1.11 times less risky than DLH Holdings. It trades about -0.29 of its potential returns per unit of risk. DLH Holdings Corp is currently generating about -0.46 per unit of risk. If you would invest  36.00  in GEE Group on February 2, 2024 and sell it today you would lose (4.00) from holding GEE Group or give up 11.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.65%
Values	Daily Returns

GEE Group  vs.  DLH Holdings Corp

GEE Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GEE Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

DLH Holdings Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DLH Holdings Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's technical indicators remain rather sound which may send shares a bit higher in June 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with GEE and DLH Holdings

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

The idea behind GEE Group and DLH Holdings Corp 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..