Correlation Between Coty and Daiwa Securities

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

By analyzing existing cross correlation between Coty Inc and Daiwa Securities Group, you can compare the effects of market volatilities on Coty and Daiwa Securities 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 Coty with a short position of Daiwa Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coty and Daiwa Securities.

Diversification Opportunities for Coty and Daiwa Securities

0.15

Correlation Coefficient

Coty  Daiwa Securities

Average diversification

The 3 months correlation between Coty and Daiwa is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Coty Inc and Daiwa Securities Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daiwa Securities and Coty 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 Coty Inc are associated (or correlated) with Daiwa Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daiwa Securities has no effect on the direction of Coty i.e., Coty and Daiwa Securities go up and down completely randomly.

Pair Corralation between Coty and Daiwa Securities

Given the investment horizon of 90 days Coty Inc is expected to under-perform the Daiwa Securities. In addition to that, Coty is 1.13 times more volatile than Daiwa Securities Group. It trades about -0.43 of its total potential returns per unit of risk. Daiwa Securities Group is currently generating about -0.15 per unit of volatility. If you would invest  685.00  in Daiwa Securities Group on October 14, 2024 and sell it today you would lose (25.00) from holding Daiwa Securities Group or give up 3.65% of portfolio value over 90 days.

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

Coty Inc  vs.  Daiwa Securities Group

Coty Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Coty Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Daiwa Securities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Daiwa Securities Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Daiwa Securities is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Coty and Daiwa Securities

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

The idea behind Coty Inc and Daiwa Securities 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.