Correlation Between Daishin Balance and SNTEnergy

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

By analyzing existing cross correlation between Daishin Balance No8 and SNTEnergy Co, you can compare the effects of market volatilities on Daishin Balance and SNTEnergy 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 SNTEnergy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daishin Balance and SNTEnergy.

Diversification Opportunities for Daishin Balance and SNTEnergy

-0.84

Correlation Coefficient

Daishin Balance  SNTEnergy

Pay attention - limited upside

The 3 months correlation between Daishin and SNTEnergy is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Daishin Balance No8 and SNTEnergy Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SNTEnergy 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 No8 are associated (or correlated) with SNTEnergy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SNTEnergy has no effect on the direction of Daishin Balance i.e., Daishin Balance and SNTEnergy go up and down completely randomly.

Pair Corralation between Daishin Balance and SNTEnergy

Assuming the 90 days trading horizon Daishin Balance is expected to generate 6.06 times less return on investment than SNTEnergy. But when comparing it to its historical volatility, Daishin Balance No8 is 1.34 times less risky than SNTEnergy. It trades about 0.02 of its potential returns per unit of risk. SNTEnergy Co is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,721,000  in SNTEnergy Co on September 22, 2024 and sell it today you would earn a total of  164,000  from holding SNTEnergy Co or generate 9.53% return on investment over 90 days.

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

Daishin Balance No8  vs.  SNTEnergy Co

Daishin Balance No8

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Daishin Balance No8 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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

SNTEnergy

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SNTEnergy Co are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, SNTEnergy sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Daishin Balance and SNTEnergy

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

The idea behind Daishin Balance No8 and SNTEnergy 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.

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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.