Correlation Between Daito Trust and VITEC SOFTWARE

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

By analyzing existing cross correlation between Daito Trust Construction and VITEC SOFTWARE GROUP, you can compare the effects of market volatilities on Daito Trust and VITEC SOFTWARE 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 Daito Trust with a short position of VITEC SOFTWARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daito Trust and VITEC SOFTWARE.

Diversification Opportunities for Daito Trust and VITEC SOFTWARE

-0.78

Correlation Coefficient

Daito Trust  VITEC SOFTWARE

Pay attention - limited upside

The 3 months correlation between Daito and VITEC is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Daito Trust Construction and VITEC SOFTWARE GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VITEC SOFTWARE GROUP and Daito Trust 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 Daito Trust Construction are associated (or correlated) with VITEC SOFTWARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VITEC SOFTWARE GROUP has no effect on the direction of Daito Trust i.e., Daito Trust and VITEC SOFTWARE go up and down completely randomly.

Pair Corralation between Daito Trust and VITEC SOFTWARE

Assuming the 90 days horizon Daito Trust Construction is expected to under-perform the VITEC SOFTWARE. But the stock apears to be less risky and, when comparing its historical volatility, Daito Trust Construction is 1.78 times less risky than VITEC SOFTWARE. The stock trades about -0.18 of its potential returns per unit of risk. The VITEC SOFTWARE GROUP is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  4,580  in VITEC SOFTWARE GROUP on December 20, 2024 and sell it today you would earn a total of  610.00  from holding VITEC SOFTWARE GROUP or generate 13.32% return on investment over 90 days.

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

Daito Trust Construction  vs.  VITEC SOFTWARE GROUP

Daito Trust Construction

Risk-Adjusted Performance

Very Weak

Over the last 90 days Daito Trust Construction has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

VITEC SOFTWARE GROUP

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VITEC SOFTWARE GROUP are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, VITEC SOFTWARE reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Daito Trust and VITEC SOFTWARE

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

The idea behind Daito Trust Construction and VITEC SOFTWARE GROUP 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.