Correlation Between Daito Trust and Lend Lease

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

Diversification Opportunities for Daito Trust and Lend Lease

0.45

Correlation Coefficient

Daito Trust  Lend Lease

Very weak diversification

The 3 months correlation between Daito and Lend is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Daito Trust Construction and Lend Lease Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lend Lease Group 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 Lend Lease. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lend Lease Group has no effect on the direction of Daito Trust i.e., Daito Trust and Lend Lease go up and down completely randomly.

Pair Corralation between Daito Trust and Lend Lease

Assuming the 90 days horizon Daito Trust Construction is expected to under-perform the Lend Lease. But the pink sheet apears to be less risky and, when comparing its historical volatility, Daito Trust Construction is 1.92 times less risky than Lend Lease. The pink sheet trades about -0.09 of its potential returns per unit of risk. The Lend Lease Group is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  356.00  in Lend Lease Group on December 19, 2024 and sell it today you would earn a total of  15.00  from holding Lend Lease Group or generate 4.21% return on investment over 90 days.

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

Daito Trust Construction  vs.  Lend Lease Group

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. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Lend Lease Group

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lend Lease Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Lend Lease may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Daito Trust and Lend Lease

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

The idea behind Daito Trust Construction and Lend Lease 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.