Correlation Between INFINITT Healthcare and Daishin Balance

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

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

Diversification Opportunities for INFINITT Healthcare and Daishin Balance

0.88

Correlation Coefficient

INFINITT Healthcare  Daishin Balance

Very poor diversification

The 3 months correlation between INFINITT and Daishin is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding INFINITT Healthcare Co 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 INFINITT Healthcare 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 INFINITT Healthcare Co 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 INFINITT Healthcare i.e., INFINITT Healthcare and Daishin Balance go up and down completely randomly.

Pair Corralation between INFINITT Healthcare and Daishin Balance

Assuming the 90 days trading horizon INFINITT Healthcare is expected to generate 1.2 times less return on investment than Daishin Balance. In addition to that, INFINITT Healthcare is 1.8 times more volatile than Daishin Balance 1. It trades about 0.08 of its total potential returns per unit of risk. Daishin Balance 1 is currently generating about 0.18 per unit of volatility. If you would invest  567,000  in Daishin Balance 1 on December 26, 2024 and sell it today you would earn a total of  159,000  from holding Daishin Balance 1 or generate 28.04% return on investment over 90 days.

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

INFINITT Healthcare Co  vs.  Daishin Balance 1

INFINITT Healthcare

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in INFINITT Healthcare Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, INFINITT Healthcare sustained solid returns over the last few months and may actually be approaching a breakup point.

Daishin Balance 1

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Daishin Balance 1 are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Daishin Balance sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with INFINITT Healthcare and Daishin Balance

The main advantage of trading using opposite INFINITT Healthcare and Daishin Balance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INFINITT Healthcare 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 INFINITT Healthcare Co 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.

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 Global Correlations module to find global opportunities by holding instruments from different markets.