Correlation Between Daiwa House and New World
Can any of the company-specific risk be diversified away by investing in both Daiwa House and New World 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 New World 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 New World Development, you can compare the effects of market volatilities on Daiwa House and New World 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 New World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daiwa House and New World.
Diversification Opportunities for Daiwa House and New World
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Daiwa and New is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Daiwa House Industry and New World Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New World Development 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 New World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New World Development has no effect on the direction of Daiwa House i.e., Daiwa House and New World go up and down completely randomly.
Pair Corralation between Daiwa House and New World
Assuming the 90 days horizon Daiwa House Industry is expected to generate 0.21 times more return on investment than New World. However, Daiwa House Industry is 4.73 times less risky than New World. It trades about 0.04 of its potential returns per unit of risk. New World Development is currently generating about -0.11 per unit of risk. If you would invest 3,062 in Daiwa House Industry on September 13, 2024 and sell it today you would earn a total of 45.00 from holding Daiwa House Industry or generate 1.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.67% |
| Values | Daily Returns |
Daiwa House Industry vs. New World Development
Performance |
| Timeline |
| Daiwa House Industry |
| New World Development |
Daiwa House and New World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daiwa House and New World
The main advantage of trading using opposite Daiwa House and New World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daiwa House position performs unexpectedly, New World 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 New World will offset losses from the drop in New World'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 |
| New World vs. Henderson Land Development | New World vs. Sun Hung Kai | New World vs. Hang Lung Properties | New World vs. Swire Pacific |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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