Correlation Between Goldman Sachs and Daiwa Securities

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

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

Diversification Opportunities for Goldman Sachs and Daiwa Securities

-0.53

Correlation Coefficient

Goldman Sachs  Daiwa Securities

Excellent diversification

The 3 months correlation between Goldman and Daiwa is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding The Goldman Sachs and Daiwa Securities Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daiwa Securities and Goldman Sachs 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 The Goldman Sachs 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 Goldman Sachs i.e., Goldman Sachs and Daiwa Securities go up and down completely randomly.

Pair Corralation between Goldman Sachs and Daiwa Securities

Assuming the 90 days horizon Goldman Sachs is expected to generate 2.77 times less return on investment than Daiwa Securities. But when comparing it to its historical volatility, The Goldman Sachs is 3.95 times less risky than Daiwa Securities. It trades about 0.11 of its potential returns per unit of risk. Daiwa Securities Group is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  657.00  in Daiwa Securities Group on September 18, 2024 and sell it today you would earn a total of  25.00  from holding Daiwa Securities Group or generate 3.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

The Goldman Sachs  vs.  Daiwa Securities Group

Goldman Sachs

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in The Goldman Sachs are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Goldman Sachs is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Daiwa Securities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Daiwa Securities Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Daiwa Securities is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Goldman Sachs and Daiwa Securities

The main advantage of trading using opposite Goldman Sachs and Daiwa Securities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs 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 The Goldman Sachs 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.