Correlation Between GEE and DHI

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Can any of the company-specific risk be diversified away by investing in both GEE and DHI 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 DHI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GEE Group and DHI Group, you can compare the effects of market volatilities on GEE and DHI 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 DHI. Check out your portfolio center. Please also check ongoing floating volatility patterns of GEE and DHI.

Diversification Opportunities for GEE and DHI

-0.42
  Correlation Coefficient
 GEE
 DHI

Very good diversification

The 3 months correlation between GEE and DHI is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding GEE Group and DHI Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DHI Group 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 DHI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DHI Group has no effect on the direction of GEE i.e., GEE and DHI go up and down completely randomly.

Pair Corralation between GEE and DHI

Considering the 90-day investment horizon GEE Group is expected to generate 0.86 times more return on investment than DHI. However, GEE Group is 1.16 times less risky than DHI. It trades about -0.01 of its potential returns per unit of risk. DHI Group is currently generating about -0.02 per unit of risk. If you would invest  56.00  in GEE Group on December 29, 2023 and sell it today you would lose (19.00) from holding GEE Group or give up 33.93% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

GEE Group  vs.  DHI Group

 Performance 
       Timeline  
GEE Group 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
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 April 2024. The current disturbance may also be a sign of long term up-swing for the company investors.
DHI Group 

Risk-Adjusted Performance

1 of 100

 
Low
 
High
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in DHI Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain technical indicators, DHI may actually be approaching a critical reversion point that can send shares even higher in April 2024.

GEE and DHI Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with GEE and DHI

The main advantage of trading using opposite GEE and DHI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GEE position performs unexpectedly, DHI 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 DHI will offset losses from the drop in DHI's long position.
The idea behind GEE Group and DHI Group 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.

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