Correlation Between Daishin Balance and Next Bt

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

By analyzing existing cross correlation between Daishin Balance No and Next Bt Co, you can compare the effects of market volatilities on Daishin Balance and Next Bt 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 Next Bt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daishin Balance and Next Bt.

Diversification Opportunities for Daishin Balance and Next Bt

0.92

Correlation Coefficient

Daishin Balance  Next Bt

Almost no diversification

The 3 months correlation between Daishin and Next is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Daishin Balance No and Next Bt Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Next Bt 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 No are associated (or correlated) with Next Bt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Next Bt has no effect on the direction of Daishin Balance i.e., Daishin Balance and Next Bt go up and down completely randomly.

Pair Corralation between Daishin Balance and Next Bt

Assuming the 90 days trading horizon Daishin Balance No is expected to under-perform the Next Bt. But the stock apears to be less risky and, when comparing its historical volatility, Daishin Balance No is 1.95 times less risky than Next Bt. The stock trades about -0.1 of its potential returns per unit of risk. The Next Bt Co is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  40,900  in Next Bt Co on October 7, 2024 and sell it today you would lose (17,500) from holding Next Bt Co or give up 42.79% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	93.61%
Values	Daily Returns

Daishin Balance No  vs.  Next Bt Co

Daishin Balance No

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Daishin Balance No has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Next Bt

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Next Bt Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Daishin Balance and Next Bt

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

The idea behind Daishin Balance No and Next Bt Co 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.