Correlation Between Graham Holdings and Daiwa Securities

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

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

Diversification Opportunities for Graham Holdings and Daiwa Securities

0.81

Correlation Coefficient

Graham Holdings  Daiwa Securities

Very poor diversification

The 3 months correlation between Graham and Daiwa is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Graham Holdings Co and Daiwa Securities Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daiwa Securities and Graham Holdings 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 Graham Holdings Co 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 Graham Holdings i.e., Graham Holdings and Daiwa Securities go up and down completely randomly.

Pair Corralation between Graham Holdings and Daiwa Securities

Considering the 90-day investment horizon Graham Holdings is expected to generate 1.27 times less return on investment than Daiwa Securities. But when comparing it to its historical volatility, Graham Holdings Co is 1.13 times less risky than Daiwa Securities. It trades about 0.1 of its potential returns per unit of risk. Daiwa Securities Group is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  650.00  in Daiwa Securities Group on December 19, 2024 and sell it today you would earn a total of  67.00  from holding Daiwa Securities Group or generate 10.31% return on investment over 90 days.

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

Graham Holdings Co  vs.  Daiwa Securities Group

Graham Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Graham Holdings Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical indicators, Graham Holdings may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Daiwa Securities

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Daiwa Securities Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, Daiwa Securities may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Graham Holdings and Daiwa Securities

The main advantage of trading using opposite Graham Holdings and Daiwa Securities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Graham Holdings 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 Graham Holdings Co 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.

Check out your portfolio center.

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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.