Correlation Between Daishin Balance and EV Advanced

Can any of the company-specific risk be diversified away by investing in both Daishin Balance and EV Advanced 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 EV Advanced 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 EV Advanced Material, you can compare the effects of market volatilities on Daishin Balance and EV Advanced 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 EV Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daishin Balance and EV Advanced.

Diversification Opportunities for Daishin Balance and EV Advanced

0.33

Correlation Coefficient

Daishin Balance  EV Advanced

Weak diversification

The 3 months correlation between Daishin and 131400 is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Daishin Balance No8 and EV Advanced Material in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EV Advanced Material 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 EV Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EV Advanced Material has no effect on the direction of Daishin Balance i.e., Daishin Balance and EV Advanced go up and down completely randomly.

Pair Corralation between Daishin Balance and EV Advanced

Assuming the 90 days trading horizon Daishin Balance No8 is expected to generate 1.62 times more return on investment than EV Advanced. However, Daishin Balance is 1.62 times more volatile than EV Advanced Material. It trades about 0.2 of its potential returns per unit of risk. EV Advanced Material is currently generating about 0.0 per unit of risk. If you would invest  437,000  in Daishin Balance No8 on December 25, 2024 and sell it today you would earn a total of  192,000  from holding Daishin Balance No8 or generate 43.94% return on investment over 90 days.

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

Daishin Balance No8  vs.  EV Advanced Material

Daishin Balance No8

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Daishin Balance No8 are ranked lower than 15 (%) 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.

EV Advanced Material

Risk-Adjusted Performance

Very Weak

Over the last 90 days EV Advanced Material has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, EV Advanced is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Daishin Balance and EV Advanced

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

The idea behind Daishin Balance No8 and EV Advanced Material 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.