Correlation Between Daido Steel and United Utilities
Can any of the company-specific risk be diversified away by investing in both Daido Steel and United Utilities 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 Daido Steel and United Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daido Steel Co and United Utilities Group, you can compare the effects of market volatilities on Daido Steel and United Utilities 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 Daido Steel with a short position of United Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daido Steel and United Utilities.
Diversification Opportunities for Daido Steel and United Utilities
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Daido and United is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Daido Steel Co and United Utilities Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Utilities and Daido Steel 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 Daido Steel Co are associated (or correlated) with United Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Utilities has no effect on the direction of Daido Steel i.e., Daido Steel and United Utilities go up and down completely randomly.
Pair Corralation between Daido Steel and United Utilities
Assuming the 90 days horizon Daido Steel Co is expected to generate 1.18 times more return on investment than United Utilities. However, Daido Steel is 1.18 times more volatile than United Utilities Group. It trades about 0.03 of its potential returns per unit of risk. United Utilities Group is currently generating about 0.04 per unit of risk. If you would invest 592.00 in Daido Steel Co on September 3, 2024 and sell it today you would earn a total of 138.00 from holding Daido Steel Co or generate 23.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daido Steel Co vs. United Utilities Group
Performance |
| Timeline |
| Daido Steel |
| United Utilities |
Daido Steel and United Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daido Steel and United Utilities
The main advantage of trading using opposite Daido Steel and United Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daido Steel position performs unexpectedly, United Utilities 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 United Utilities will offset losses from the drop in United Utilities' long position.| Daido Steel vs. ArcelorMittal | Daido Steel vs. Steel Dynamics | Daido Steel vs. NIPPON STEEL SPADR | Daido Steel vs. POSCO Holdings |
| United Utilities vs. Guangdong Investment Limited | United Utilities vs. Superior Plus Corp | United Utilities vs. NMI Holdings | United Utilities vs. Origin Agritech |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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