Correlation Between DAIDO METAL and DELCATH SYS

Can any of the company-specific risk be diversified away by investing in both DAIDO METAL and DELCATH SYS 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 DAIDO METAL and DELCATH SYS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DAIDO METAL TD and DELCATH SYS NEW, you can compare the effects of market volatilities on DAIDO METAL and DELCATH SYS 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 DAIDO METAL with a short position of DELCATH SYS. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAIDO METAL and DELCATH SYS.

Diversification Opportunities for DAIDO METAL and DELCATH SYS

0.01

Correlation Coefficient

DAIDO METAL  DELCATH SYS

Significant diversification

The 3 months correlation between DAIDO and DELCATH is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding DAIDO METAL TD and DELCATH SYS NEW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DELCATH SYS NEW and DAIDO METAL 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 DAIDO METAL TD are associated (or correlated) with DELCATH SYS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DELCATH SYS NEW has no effect on the direction of DAIDO METAL i.e., DAIDO METAL and DELCATH SYS go up and down completely randomly.

Pair Corralation between DAIDO METAL and DELCATH SYS

Assuming the 90 days horizon DAIDO METAL is expected to generate 1.14 times less return on investment than DELCATH SYS. But when comparing it to its historical volatility, DAIDO METAL TD is 3.0 times less risky than DELCATH SYS. It trades about 0.2 of its potential returns per unit of risk. DELCATH SYS NEW is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,100  in DELCATH SYS NEW on October 9, 2024 and sell it today you would earn a total of  100.00  from holding DELCATH SYS NEW or generate 9.09% return on investment over 90 days.

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

DAIDO METAL TD  vs.  DELCATH SYS NEW

DAIDO METAL TD

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DAIDO METAL TD are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, DAIDO METAL may actually be approaching a critical reversion point that can send shares even higher in February 2025.

DELCATH SYS NEW

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in DELCATH SYS NEW are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, DELCATH SYS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DAIDO METAL and DELCATH SYS

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

The idea behind DAIDO METAL TD and DELCATH SYS NEW 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.