Correlation Between InBody CoLtd and DIO

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

By analyzing existing cross correlation between InBody CoLtd and DIO Corporation, you can compare the effects of market volatilities on InBody CoLtd and DIO 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 InBody CoLtd with a short position of DIO. Check out your portfolio center. Please also check ongoing floating volatility patterns of InBody CoLtd and DIO.

Diversification Opportunities for InBody CoLtd and DIO

0.41

Correlation Coefficient

InBody CoLtd  DIO

Very weak diversification

The 3 months correlation between InBody and DIO is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding InBody CoLtd and DIO Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DIO Corporation and InBody CoLtd 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 InBody CoLtd are associated (or correlated) with DIO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DIO Corporation has no effect on the direction of InBody CoLtd i.e., InBody CoLtd and DIO go up and down completely randomly.

Pair Corralation between InBody CoLtd and DIO

Assuming the 90 days trading horizon InBody CoLtd is expected to under-perform the DIO. In addition to that, InBody CoLtd is 1.55 times more volatile than DIO Corporation. It trades about -0.02 of its total potential returns per unit of risk. DIO Corporation is currently generating about 0.09 per unit of volatility. If you would invest  1,614,000  in DIO Corporation on December 30, 2024 and sell it today you would earn a total of  106,000  from holding DIO Corporation or generate 6.57% return on investment over 90 days.

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

InBody CoLtd  vs.  DIO Corp.

InBody CoLtd

Risk-Adjusted Performance

Very Weak

Over the last 90 days InBody CoLtd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, InBody CoLtd is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

DIO Corporation

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DIO Corporation are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, DIO may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with InBody CoLtd and DIO

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

The idea behind InBody CoLtd and DIO Corporation 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.

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.