Correlation Between MITECH CoLtd and Daou Data

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

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

Diversification Opportunities for MITECH CoLtd and Daou Data

0.07

Correlation Coefficient

MITECH CoLtd  Daou Data

Significant diversification

The 3 months correlation between MITECH and Daou is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding MITECH CoLtd and Daou Data Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daou Data Corp and MITECH 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 MITECH CoLtd are associated (or correlated) with Daou Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daou Data Corp has no effect on the direction of MITECH CoLtd i.e., MITECH CoLtd and Daou Data go up and down completely randomly.

Pair Corralation between MITECH CoLtd and Daou Data

Assuming the 90 days trading horizon MITECH CoLtd is expected to generate 0.96 times more return on investment than Daou Data. However, MITECH CoLtd is 1.04 times less risky than Daou Data. It trades about 0.0 of its potential returns per unit of risk. Daou Data Corp is currently generating about -0.08 per unit of risk. If you would invest  1,041,340  in MITECH CoLtd on October 4, 2024 and sell it today you would lose (229,340) from holding MITECH CoLtd or give up 22.02% of portfolio value over 90 days.

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

MITECH CoLtd  vs.  Daou Data Corp

MITECH CoLtd

Risk-Adjusted Performance

1 of 100

Weak

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

Daou Data Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Daou Data Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with MITECH CoLtd and Daou Data

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

The idea behind MITECH CoLtd and Daou Data Corp 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.