Correlation Between Daito Trust and Barrick Gold

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

Diversification Opportunities for Daito Trust and Barrick Gold

-0.37

Correlation Coefficient

Daito Trust  Barrick Gold

Very good diversification

The 3 months correlation between Daito and Barrick is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Daito Trust Construction and Barrick Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barrick Gold 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 Barrick Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barrick Gold has no effect on the direction of Daito Trust i.e., Daito Trust and Barrick Gold go up and down completely randomly.

Pair Corralation between Daito Trust and Barrick Gold

Assuming the 90 days horizon Daito Trust Construction is expected to under-perform the Barrick Gold. But the stock apears to be less risky and, when comparing its historical volatility, Daito Trust Construction is 1.63 times less risky than Barrick Gold. The stock trades about -0.18 of its potential returns per unit of risk. The Barrick Gold is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  1,481  in Barrick Gold on December 20, 2024 and sell it today you would earn a total of  289.00  from holding Barrick Gold or generate 19.51% return on investment over 90 days.

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

Daito Trust Construction  vs.  Barrick Gold

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.

Barrick Gold

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Barrick Gold are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Barrick Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Daito Trust and Barrick Gold

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

The idea behind Daito Trust Construction and Barrick Gold 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.