Correlation Between Daishin Balance and Kmw

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

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

Diversification Opportunities for Daishin Balance and Kmw

-0.28

Correlation Coefficient

Daishin Balance  Kmw

Very good diversification

The 3 months correlation between Daishin and Kmw is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Daishin Balance 1 and Kmw Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kmw Inc and Daishin Balance 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 Daishin Balance 1 are associated (or correlated) with Kmw. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kmw Inc has no effect on the direction of Daishin Balance i.e., Daishin Balance and Kmw go up and down completely randomly.

Pair Corralation between Daishin Balance and Kmw

Assuming the 90 days trading horizon Daishin Balance 1 is expected to generate 0.88 times more return on investment than Kmw. However, Daishin Balance 1 is 1.14 times less risky than Kmw. It trades about -0.02 of its potential returns per unit of risk. Kmw Inc is currently generating about -0.1 per unit of risk. If you would invest  560,000  in Daishin Balance 1 on September 22, 2024 and sell it today you would lose (64,000) from holding Daishin Balance 1 or give up 11.43% of portfolio value over 90 days.

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

Daishin Balance 1  vs.  Kmw Inc

Daishin Balance 1

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Daishin Balance 1 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.

Kmw Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kmw Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Kmw may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Daishin Balance and Kmw

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

The idea behind Daishin Balance 1 and Kmw Inc 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.