Correlation Between Daishin Balance and SFA Engineering
Can any of the company-specific risk be diversified away by investing in both Daishin Balance and SFA Engineering 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 SFA Engineering 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 SFA Engineering, you can compare the effects of market volatilities on Daishin Balance and SFA Engineering 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 SFA Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daishin Balance and SFA Engineering.
Diversification Opportunities for Daishin Balance and SFA Engineering
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Daishin and SFA is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Daishin Balance No8 and SFA Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SFA Engineering 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 SFA Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SFA Engineering has no effect on the direction of Daishin Balance i.e., Daishin Balance and SFA Engineering go up and down completely randomly.
Pair Corralation between Daishin Balance and SFA Engineering
Assuming the 90 days trading horizon Daishin Balance No8 is expected to under-perform the SFA Engineering. In addition to that, Daishin Balance is 1.09 times more volatile than SFA Engineering. It trades about -0.17 of its total potential returns per unit of risk. SFA Engineering is currently generating about -0.07 per unit of volatility. If you would invest 2,475,000 in SFA Engineering on September 2, 2024 and sell it today you would lose (345,000) from holding SFA Engineering or give up 13.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daishin Balance No8 vs. SFA Engineering
Performance |
| Timeline |
| Daishin Balance No8 |
| SFA Engineering |
Daishin Balance and SFA Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daishin Balance and SFA Engineering
The main advantage of trading using opposite Daishin Balance and SFA Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daishin Balance position performs unexpectedly, SFA Engineering 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 SFA Engineering will offset losses from the drop in SFA Engineering'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 |
| SFA Engineering vs. Dongsin Engineering Construction | SFA Engineering vs. Doosan Fuel Cell | SFA Engineering vs. Daishin Balance 1 | SFA Engineering 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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