Correlation Between Daiwa House and Holiday Island
Can any of the company-specific risk be diversified away by investing in both Daiwa House and Holiday Island 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 Daiwa House and Holiday Island into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daiwa House Industry and Holiday Island Holdings, you can compare the effects of market volatilities on Daiwa House and Holiday Island 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 Daiwa House with a short position of Holiday Island. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daiwa House and Holiday Island.
Diversification Opportunities for Daiwa House and Holiday Island
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Daiwa and Holiday is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Daiwa House Industry and Holiday Island Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holiday Island Holdings and Daiwa House 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 Daiwa House Industry are associated (or correlated) with Holiday Island. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holiday Island Holdings has no effect on the direction of Daiwa House i.e., Daiwa House and Holiday Island go up and down completely randomly.
Pair Corralation between Daiwa House and Holiday Island
Assuming the 90 days horizon Daiwa House is expected to generate 24.5 times less return on investment than Holiday Island. But when comparing it to its historical volatility, Daiwa House Industry is 11.43 times less risky than Holiday Island. It trades about 0.03 of its potential returns per unit of risk. Holiday Island Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 4.80 in Holiday Island Holdings on August 24, 2024 and sell it today you would lose (2.52) from holding Holiday Island Holdings or give up 52.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Daiwa House Industry vs. Holiday Island Holdings
Performance |
| Timeline |
| Daiwa House Industry |
| Holiday Island Holdings |
Daiwa House and Holiday Island Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daiwa House and Holiday Island
The main advantage of trading using opposite Daiwa House and Holiday Island positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daiwa House position performs unexpectedly, Holiday Island 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 Holiday Island will offset losses from the drop in Holiday Island's long position.| Daiwa House vs. Sino Land Co | Daiwa House vs. Sun Hung Kai | Daiwa House vs. Holiday Island Holdings | Daiwa House vs. China Overseas Land |
| Holiday Island vs. Smart REIT | Holiday Island vs. Phillips Edison Co | Holiday Island vs. Choice Properties Real | Holiday Island vs. Simon Property Group |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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