Correlation Between Daito Trust and COSMOSTEEL HLDGS

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

Diversification Opportunities for Daito Trust and COSMOSTEEL HLDGS

-0.49

Correlation Coefficient

Daito Trust  COSMOSTEEL HLDGS

Very good diversification

The 3 months correlation between Daito and COSMOSTEEL is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Daito Trust Construction and COSMOSTEEL HLDGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COSMOSTEEL HLDGS 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 COSMOSTEEL HLDGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COSMOSTEEL HLDGS has no effect on the direction of Daito Trust i.e., Daito Trust and COSMOSTEEL HLDGS go up and down completely randomly.

Pair Corralation between Daito Trust and COSMOSTEEL HLDGS

Assuming the 90 days horizon Daito Trust Construction is expected to under-perform the COSMOSTEEL HLDGS. But the stock apears to be less risky and, when comparing its historical volatility, Daito Trust Construction is 3.01 times less risky than COSMOSTEEL HLDGS. The stock trades about -0.1 of its potential returns per unit of risk. The COSMOSTEEL HLDGS is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  6.60  in COSMOSTEEL HLDGS on December 30, 2024 and sell it today you would earn a total of  1.30  from holding COSMOSTEEL HLDGS or generate 19.7% return on investment over 90 days.

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

Daito Trust Construction  vs.  COSMOSTEEL HLDGS

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 latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

COSMOSTEEL HLDGS

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in COSMOSTEEL HLDGS are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, COSMOSTEEL HLDGS unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Daito Trust and COSMOSTEEL HLDGS

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

The idea behind Daito Trust Construction and COSMOSTEEL HLDGS 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..