Correlation Between Daishin Balance and LF
Can any of the company-specific risk be diversified away by investing in both Daishin Balance and LF 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 LF 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 LF Co, you can compare the effects of market volatilities on Daishin Balance and LF 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 LF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daishin Balance and LF.
Diversification Opportunities for Daishin Balance and LF
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Daishin and LF is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Daishin Balance 1 and LF Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LF Co 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 LF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LF Co has no effect on the direction of Daishin Balance i.e., Daishin Balance and LF go up and down completely randomly.
Pair Corralation between Daishin Balance and LF
Assuming the 90 days trading horizon Daishin Balance 1 is expected to generate 0.69 times more return on investment than LF. However, Daishin Balance 1 is 1.45 times less risky than LF. It trades about 0.09 of its potential returns per unit of risk. LF Co is currently generating about -0.1 per unit of risk. If you would invest 512,000 in Daishin Balance 1 on September 3, 2024 and sell it today you would earn a total of 26,000 from holding Daishin Balance 1 or generate 5.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daishin Balance 1 vs. LF Co
Performance |
| Timeline |
| Daishin Balance 1 |
| LF Co |
Daishin Balance and LF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daishin Balance and LF
The main advantage of trading using opposite Daishin Balance and LF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daishin Balance position performs unexpectedly, LF 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 LF will offset losses from the drop in LF'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 |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
Other Complementary Tools
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |