Correlation Between Redfin Corp and DatChat

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

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

Diversification Opportunities for Redfin Corp and DatChat

0.14

Correlation Coefficient

Redfin Corp  DatChat

Average diversification

The 3 months correlation between Redfin and DatChat is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Redfin Corp and DatChat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DatChat and Redfin Corp 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 Redfin Corp are associated (or correlated) with DatChat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DatChat has no effect on the direction of Redfin Corp i.e., Redfin Corp and DatChat go up and down completely randomly.

Pair Corralation between Redfin Corp and DatChat

Given the investment horizon of 90 days Redfin Corp is expected to generate 0.66 times more return on investment than DatChat. However, Redfin Corp is 1.53 times less risky than DatChat. It trades about 0.16 of its potential returns per unit of risk. DatChat is currently generating about 0.01 per unit of risk. If you would invest  925.00  in Redfin Corp on April 24, 2025 and sell it today you would earn a total of  194.00  from holding Redfin Corp or generate 20.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	75.81%
Values	Daily Returns

Redfin Corp  vs.  DatChat

Redfin Corp

Risk-Adjusted Performance

Good

Over the last 90 days Redfin Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very inconsistent technical and fundamental indicators, Redfin Corp displayed solid returns over the last few months and may actually be approaching a breakup point.

DatChat

Risk-Adjusted Performance

Very Weak

Over the last 90 days DatChat has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, DatChat is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Redfin Corp and DatChat

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

The idea behind Redfin Corp and DatChat 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.