4. Get measurable handicap ratings for stock winners and losers

Find any clusters of stocks that move in concert with one another, whether their directions agree or disagree. Uncover similarities measured from the price history of your stocks, instead of relying on arbitrary, unstable and qualitative judgments about membership in sector, industry, capitalization category, or value versus growth. Use the automatically calculated correlations among members of the group to identify pairs of keepers or weepers.

For example, here is a report on just one cluster of four stocks from an actual run on a real portfolio (with aliased ticker symbols), as saved in the User Guide:

This triangular array shows the four member stocks of that cluster and the correlation for each pair. The WA1-FA1 and WA1-FB2 pairs show strong negative correlations; these winners reduce risk, so you should keep these pairings of stocks. The FB2-FA1 and FD4-FA1 pairs have large positive correlations, so in each pair, you can substitute the winner stock with the higher return (shown elsewhere in the printed report) for the loser stock with the lower return. Diagoran uses additional tools to find and display the most significant pairs of stocks that efficiently reduce the risk in your existing portfolio.

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