Correlation Between Calliditas Therapeutics and Diamond Hill

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

By analyzing existing cross correlation between Calliditas Therapeutics and Diamond Hill Investment, you can compare the effects of market volatilities on Calliditas Therapeutics and Diamond Hill 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 Calliditas Therapeutics with a short position of Diamond Hill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Calliditas Therapeutics and Diamond Hill.

Diversification Opportunities for Calliditas Therapeutics and Diamond Hill

0.33

Correlation Coefficient

Calliditas Therapeutics  Diamond Hill

Weak diversification

The 3 months correlation between Calliditas and Diamond is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Calliditas Therapeutics and Diamond Hill Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamond Hill Investment and Calliditas Therapeutics 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 Calliditas Therapeutics are associated (or correlated) with Diamond Hill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamond Hill Investment has no effect on the direction of Calliditas Therapeutics i.e., Calliditas Therapeutics and Diamond Hill go up and down completely randomly.

Pair Corralation between Calliditas Therapeutics and Diamond Hill

Given the investment horizon of 90 days Calliditas Therapeutics is expected to under-perform the Diamond Hill. In addition to that, Calliditas Therapeutics is 5.1 times more volatile than Diamond Hill Investment. It trades about -0.07 of its total potential returns per unit of risk. Diamond Hill Investment is currently generating about 0.04 per unit of volatility. If you would invest  15,059  in Diamond Hill Investment on January 29, 2024 and sell it today you would earn a total of  90.00  from holding Diamond Hill Investment or generate 0.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Calliditas Therapeutics  vs.  Diamond Hill Investment

Calliditas Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Calliditas Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's essential indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Diamond Hill Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Diamond Hill Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's forward indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Calliditas Therapeutics and Diamond Hill

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

The idea behind Calliditas Therapeutics and Diamond Hill Investment 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.