Correlation Between Daikin Industries and LIXIL
Can any of the company-specific risk be diversified away by investing in both Daikin Industries and LIXIL 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 Daikin Industries and LIXIL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daikin Industries Ltd and LIXIL, you can compare the effects of market volatilities on Daikin Industries and LIXIL 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 Daikin Industries with a short position of LIXIL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daikin Industries and LIXIL.
Diversification Opportunities for Daikin Industries and LIXIL
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Daikin and LIXIL is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Daikin Industries Ltd and LIXIL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LIXIL and Daikin Industries 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 Daikin Industries Ltd are associated (or correlated) with LIXIL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LIXIL has no effect on the direction of Daikin Industries i.e., Daikin Industries and LIXIL go up and down completely randomly.
Pair Corralation between Daikin Industries and LIXIL
Assuming the 90 days horizon Daikin Industries Ltd is expected to generate 0.31 times more return on investment than LIXIL. However, Daikin Industries Ltd is 3.22 times less risky than LIXIL. It trades about -0.02 of its potential returns per unit of risk. LIXIL is currently generating about -0.24 per unit of risk. If you would invest 1,640 in Daikin Industries Ltd on September 3, 2024 and sell it today you would lose (433.00) from holding Daikin Industries Ltd or give up 26.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 3.64% |
| Values | Daily Returns |
Daikin Industries Ltd vs. LIXIL
Performance |
| Timeline |
| Daikin Industries |
| LIXIL |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Daikin Industries and LIXIL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daikin Industries and LIXIL
The main advantage of trading using opposite Daikin Industries and LIXIL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daikin Industries position performs unexpectedly, LIXIL 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 LIXIL will offset losses from the drop in LIXIL's long position.| Daikin Industries vs. NIBE Industrier AB | Daikin Industries vs. Trane Technologies plc | Daikin Industries vs. AAON Inc | Daikin Industries vs. Johnson Controls International |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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