Correlation Between KTB Investment and Daishin Balance

Can any of the company-specific risk be diversified away by investing in both KTB Investment and Daishin Balance 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 KTB Investment and Daishin Balance into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between KTB Investment Securities and Daishin Balance 1, you can compare the effects of market volatilities on KTB Investment and Daishin Balance 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 KTB Investment with a short position of Daishin Balance. Check out your portfolio center. Please also check ongoing floating volatility patterns of KTB Investment and Daishin Balance.

Diversification Opportunities for KTB Investment and Daishin Balance

0.27

Correlation Coefficient

KTB Investment  Daishin Balance

Modest diversification

The 3 months correlation between KTB and Daishin is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding KTB Investment Securities and Daishin Balance 1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daishin Balance 1 and KTB Investment 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 KTB Investment Securities are associated (or correlated) with Daishin Balance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daishin Balance 1 has no effect on the direction of KTB Investment i.e., KTB Investment and Daishin Balance go up and down completely randomly.

Pair Corralation between KTB Investment and Daishin Balance

Assuming the 90 days trading horizon KTB Investment Securities is expected to generate 0.94 times more return on investment than Daishin Balance. However, KTB Investment Securities is 1.07 times less risky than Daishin Balance. It trades about 0.01 of its potential returns per unit of risk. Daishin Balance 1 is currently generating about -0.03 per unit of risk. If you would invest  314,630  in KTB Investment Securities on October 11, 2024 and sell it today you would lose (14,130) from holding KTB Investment Securities or give up 4.49% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

KTB Investment Securities  vs.  Daishin Balance 1

KTB Investment Securities

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KTB Investment Securities are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, KTB Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Daishin Balance 1

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Daishin Balance 1 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Daishin Balance is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with KTB Investment and Daishin Balance

The main advantage of trading using opposite KTB Investment and Daishin Balance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KTB Investment position performs unexpectedly, Daishin Balance 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 Daishin Balance will offset losses from the drop in Daishin Balance's long position.

The idea behind KTB Investment Securities and Daishin Balance 1 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.