Correlation Between Daishin Balance and Kginicis CoLtd
Can any of the company-specific risk be diversified away by investing in both Daishin Balance and Kginicis CoLtd 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 Daishin Balance and Kginicis CoLtd into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daishin Balance 1 and Kginicis CoLtd, you can compare the effects of market volatilities on Daishin Balance and Kginicis CoLtd 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 Daishin Balance with a short position of Kginicis CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daishin Balance and Kginicis CoLtd.
Diversification Opportunities for Daishin Balance and Kginicis CoLtd
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Daishin and Kginicis is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Daishin Balance 1 and Kginicis CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kginicis CoLtd and Daishin Balance 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 Daishin Balance 1 are associated (or correlated) with Kginicis CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kginicis CoLtd has no effect on the direction of Daishin Balance i.e., Daishin Balance and Kginicis CoLtd go up and down completely randomly.
Pair Corralation between Daishin Balance and Kginicis CoLtd
Assuming the 90 days trading horizon Daishin Balance 1 is expected to generate 1.6 times more return on investment than Kginicis CoLtd. However, Daishin Balance is 1.6 times more volatile than Kginicis CoLtd. It trades about -0.04 of its potential returns per unit of risk. Kginicis CoLtd is currently generating about -0.09 per unit of risk. If you would invest 723,000 in Daishin Balance 1 on September 3, 2024 and sell it today you would lose (175,000) from holding Daishin Balance 1 or give up 24.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daishin Balance 1 vs. Kginicis CoLtd
Performance |
| Timeline |
| Daishin Balance 1 |
| Kginicis CoLtd |
Daishin Balance and Kginicis CoLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daishin Balance and Kginicis CoLtd
The main advantage of trading using opposite Daishin Balance and Kginicis CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daishin Balance position performs unexpectedly, Kginicis CoLtd 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 Kginicis CoLtd will offset losses from the drop in Kginicis CoLtd's long position.| Daishin Balance vs. ABCO Electronics Co | Daishin Balance vs. LG Electronics | Daishin Balance vs. Okins Electronics Co | Daishin Balance vs. Sungmoon Electronics Co |
| Kginicis CoLtd vs. Dongsin Engineering Construction | Kginicis CoLtd vs. Doosan Fuel Cell | Kginicis CoLtd vs. Daishin Balance 1 | Kginicis CoLtd vs. Total Soft Bank |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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