Correlation Between Daito Trust and Sharc International

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

Diversification Opportunities for Daito Trust and Sharc International

0.77

Correlation Coefficient

Daito Trust  Sharc International

Poor diversification

The 3 months correlation between Daito and Sharc is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Daito Trust Construction and Sharc International Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sharc International 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 Sharc International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sharc International has no effect on the direction of Daito Trust i.e., Daito Trust and Sharc International go up and down completely randomly.

Pair Corralation between Daito Trust and Sharc International

Assuming the 90 days horizon Daito Trust Construction is expected to generate 0.15 times more return on investment than Sharc International. However, Daito Trust Construction is 6.67 times less risky than Sharc International. It trades about -0.15 of its potential returns per unit of risk. Sharc International Systems is currently generating about -0.11 per unit of risk. If you would invest  10,600  in Daito Trust Construction on December 26, 2024 and sell it today you would lose (1,100) from holding Daito Trust Construction or give up 10.38% of portfolio value over 90 days.

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

Daito Trust Construction  vs.  Sharc International Systems

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.

Sharc International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sharc International Systems has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's forward 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.

Pair Trading with Daito Trust and Sharc International

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

The idea behind Daito Trust Construction and Sharc International Systems 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.