Correlation Between Daikin IndustriesLtd and Carrier Global

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

By analyzing existing cross correlation between Daikin IndustriesLtd and Carrier Global Corp, you can compare the effects of market volatilities on Daikin IndustriesLtd and Carrier Global 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 Daikin IndustriesLtd with a short position of Carrier Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daikin IndustriesLtd and Carrier Global.

Diversification Opportunities for Daikin IndustriesLtd and Carrier Global

0.55

Correlation Coefficient

Daikin IndustriesLtd  Carrier Global

Very weak diversification

The 3 months correlation between Daikin and Carrier is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Daikin IndustriesLtd and Carrier Global Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carrier Global Corp and Daikin IndustriesLtd 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 Daikin IndustriesLtd are associated (or correlated) with Carrier Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carrier Global Corp has no effect on the direction of Daikin IndustriesLtd i.e., Daikin IndustriesLtd and Carrier Global go up and down completely randomly.

Pair Corralation between Daikin IndustriesLtd and Carrier Global

Assuming the 90 days horizon Daikin IndustriesLtd is expected to under-perform the Carrier Global. In addition to that, Daikin IndustriesLtd is 1.94 times more volatile than Carrier Global Corp. It trades about -0.01 of its total potential returns per unit of risk. Carrier Global Corp is currently generating about 0.05 per unit of volatility. If you would invest  5,694  in Carrier Global Corp on September 20, 2024 and sell it today you would earn a total of  1,009  from holding Carrier Global Corp or generate 17.72% return on investment over 90 days.

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

Daikin IndustriesLtd  vs.  Carrier Global Corp

Daikin IndustriesLtd

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Daikin IndustriesLtd are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, Daikin IndustriesLtd is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Carrier Global Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carrier Global Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with inconsistent performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Daikin IndustriesLtd and Carrier Global

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

The idea behind Daikin IndustriesLtd and Carrier Global Corp 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.