Correlation Between Daimler Truck and Komatsu
Can any of the company-specific risk be diversified away by investing in both Daimler Truck and Komatsu 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 Daimler Truck and Komatsu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daimler Truck Holding and Komatsu, you can compare the effects of market volatilities on Daimler Truck and Komatsu 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 Daimler Truck with a short position of Komatsu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daimler Truck and Komatsu.
Diversification Opportunities for Daimler Truck and Komatsu
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Daimler and Komatsu is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Daimler Truck Holding and Komatsu in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Komatsu and Daimler Truck 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 Daimler Truck Holding are associated (or correlated) with Komatsu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Komatsu has no effect on the direction of Daimler Truck i.e., Daimler Truck and Komatsu go up and down completely randomly.
Pair Corralation between Daimler Truck and Komatsu
Assuming the 90 days horizon Daimler Truck is expected to generate 2.64 times less return on investment than Komatsu. In addition to that, Daimler Truck is 2.27 times more volatile than Komatsu. It trades about 0.06 of its total potential returns per unit of risk. Komatsu is currently generating about 0.34 per unit of volatility. If you would invest 2,649 in Komatsu on September 14, 2024 and sell it today you would earn a total of 168.00 from holding Komatsu or generate 6.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daimler Truck Holding vs. Komatsu
Performance |
| Timeline |
| Daimler Truck Holding |
| Komatsu |
Daimler Truck and Komatsu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daimler Truck and Komatsu
The main advantage of trading using opposite Daimler Truck and Komatsu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daimler Truck position performs unexpectedly, Komatsu 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 Komatsu will offset losses from the drop in Komatsu's long position.| Daimler Truck vs. Hino Motors Ltd | Daimler Truck vs. Volvo AB ADR | Daimler Truck vs. Columbus McKinnon | Daimler Truck vs. Hyster Yale Materials Handling |
| Komatsu vs. HUMANA INC | Komatsu vs. Barloworld Ltd ADR | Komatsu vs. Morningstar Unconstrained Allocation | Komatsu vs. Thrivent High Yield |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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