Correlation Between Daito Trust and New World

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

Diversification Opportunities for Daito Trust and New World

0.19

Correlation Coefficient

Daito Trust  New World

Average diversification

The 3 months correlation between Daito and New is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Daito Trust Construction and New World Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New World Development 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 New World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New World Development has no effect on the direction of Daito Trust i.e., Daito Trust and New World go up and down completely randomly.

Pair Corralation between Daito Trust and New World

Assuming the 90 days horizon Daito Trust Construction is expected to generate 0.34 times more return on investment than New World. However, Daito Trust Construction is 2.96 times less risky than New World. It trades about 0.02 of its potential returns per unit of risk. New World Development is currently generating about -0.02 per unit of risk. If you would invest  2,461  in Daito Trust Construction on September 24, 2024 and sell it today you would earn a total of  294.00  from holding Daito Trust Construction or generate 11.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	97.99%
Values	Daily Returns

Daito Trust Construction  vs.  New World Development

Daito Trust Construction

Risk-Adjusted Performance

0 of 100

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.

New World Development

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Daito Trust and New World

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

The idea behind Daito Trust Construction and New World Development 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.