Correlation Between Daishin Balance and STI
Can any of the company-specific risk be diversified away by investing in both Daishin Balance and STI 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 STI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daishin Balance No8 and STI Co, you can compare the effects of market volatilities on Daishin Balance and STI 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 STI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daishin Balance and STI.
Diversification Opportunities for Daishin Balance and STI
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Daishin and STI is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Daishin Balance No8 and STI Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STI 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 No8 are associated (or correlated) with STI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STI Co has no effect on the direction of Daishin Balance i.e., Daishin Balance and STI go up and down completely randomly.
Pair Corralation between Daishin Balance and STI
Assuming the 90 days trading horizon Daishin Balance No8 is expected to generate 0.93 times more return on investment than STI. However, Daishin Balance No8 is 1.07 times less risky than STI. It trades about -0.43 of its potential returns per unit of risk. STI Co is currently generating about -0.51 per unit of risk. If you would invest 566,000 in Daishin Balance No8 on September 2, 2024 and sell it today you would lose (144,500) from holding Daishin Balance No8 or give up 25.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daishin Balance No8 vs. STI Co
Performance |
| Timeline |
| Daishin Balance No8 |
| STI Co |
Daishin Balance and STI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daishin Balance and STI
The main advantage of trading using opposite Daishin Balance and STI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daishin Balance position performs unexpectedly, STI 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 STI will offset losses from the drop in STI's long position.| Daishin Balance vs. Value Added Technology | Daishin Balance vs. Konan Technology | Daishin Balance vs. Puloon Technology | Daishin Balance vs. NICE Information Service |
| STI vs. Dongsin Engineering Construction | STI vs. Doosan Fuel Cell | STI vs. Daishin Balance 1 | STI 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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