Correlation Between Daios Plastics and Thrace Plastics

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

By analyzing existing cross correlation between Daios Plastics SA and Thrace Plastics Holding, you can compare the effects of market volatilities on Daios Plastics and Thrace Plastics 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 Daios Plastics with a short position of Thrace Plastics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daios Plastics and Thrace Plastics.

Diversification Opportunities for Daios Plastics and Thrace Plastics

-0.3

Correlation Coefficient

Daios Plastics  Thrace Plastics

Very good diversification

The 3 months correlation between Daios and Thrace is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Daios Plastics SA and Thrace Plastics Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thrace Plastics Holding and Daios Plastics 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 Daios Plastics SA are associated (or correlated) with Thrace Plastics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thrace Plastics Holding has no effect on the direction of Daios Plastics i.e., Daios Plastics and Thrace Plastics go up and down completely randomly.

Pair Corralation between Daios Plastics and Thrace Plastics

Assuming the 90 days trading horizon Daios Plastics is expected to generate 1.13 times less return on investment than Thrace Plastics. In addition to that, Daios Plastics is 1.79 times more volatile than Thrace Plastics Holding. It trades about 0.03 of its total potential returns per unit of risk. Thrace Plastics Holding is currently generating about 0.07 per unit of volatility. If you would invest  394.00  in Thrace Plastics Holding on December 22, 2024 and sell it today you would earn a total of  23.00  from holding Thrace Plastics Holding or generate 5.84% return on investment over 90 days.

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

Daios Plastics SA  vs.  Thrace Plastics Holding

Daios Plastics SA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Daios Plastics SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Daios Plastics is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Thrace Plastics Holding

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Thrace Plastics Holding are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Thrace Plastics may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Daios Plastics and Thrace Plastics

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

The idea behind Daios Plastics SA and Thrace Plastics Holding 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 Global Correlations module to find global opportunities by holding instruments from different markets.