Correlation Between N Leventeris and Daios Plastics

Can any of the company-specific risk be diversified away by investing in both N Leventeris and Daios Plastics 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 N Leventeris and Daios Plastics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between N Leventeris SA and Daios Plastics SA, you can compare the effects of market volatilities on N Leventeris and Daios Plastics 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 N Leventeris with a short position of Daios Plastics. Check out your portfolio center. Please also check ongoing floating volatility patterns of N Leventeris and Daios Plastics.

Diversification Opportunities for N Leventeris and Daios Plastics

-0.49

Correlation Coefficient

N Leventeris  Daios Plastics

Very good diversification

The 3 months correlation between LEBEP and Daios is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding N Leventeris SA and Daios Plastics SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daios Plastics SA and N Leventeris 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 N Leventeris SA are associated (or correlated) with Daios Plastics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daios Plastics SA has no effect on the direction of N Leventeris i.e., N Leventeris and Daios Plastics go up and down completely randomly.

Pair Corralation between N Leventeris and Daios Plastics

Assuming the 90 days trading horizon N Leventeris SA is expected to under-perform the Daios Plastics. In addition to that, N Leventeris is 1.74 times more volatile than Daios Plastics SA. It trades about -0.03 of its total potential returns per unit of risk. Daios Plastics SA is currently generating about 0.09 per unit of volatility. If you would invest  352.00  in Daios Plastics SA on December 30, 2024 and sell it today you would earn a total of  48.00  from holding Daios Plastics SA or generate 13.64% return on investment over 90 days.

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

N Leventeris SA  vs.  Daios Plastics SA

N Leventeris SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days N Leventeris SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain 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.

Daios Plastics SA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Daios Plastics SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Daios Plastics sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with N Leventeris and Daios Plastics

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

The idea behind N Leventeris SA and Daios Plastics SA 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.