Correlation Between Mid Atlantic and Daiwa Securities

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

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

Diversification Opportunities for Mid Atlantic and Daiwa Securities

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Correlation Coefficient

Mid Atlantic  Daiwa Securities

Pay attention - limited upside

The 3 months correlation between Mid and Daiwa is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Mid Atlantic Home Health and Daiwa Securities Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daiwa Securities and Mid Atlantic 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 Mid Atlantic Home Health 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 Mid Atlantic i.e., Mid Atlantic and Daiwa Securities go up and down completely randomly.

Pair Corralation between Mid Atlantic and Daiwa Securities

Given the investment horizon of 90 days Mid Atlantic Home Health is expected to under-perform the Daiwa Securities. In addition to that, Mid Atlantic is 1.9 times more volatile than Daiwa Securities Group. It trades about -0.06 of its total potential returns per unit of risk. Daiwa Securities Group is currently generating about 0.05 per unit of volatility. If you would invest  448.00  in Daiwa Securities Group on September 26, 2024 and sell it today you would earn a total of  202.00  from holding Daiwa Securities Group or generate 45.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	73.99%
Values	Daily Returns

Mid Atlantic Home Health  vs.  Daiwa Securities Group

Mid Atlantic Home

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Mid Atlantic Home Health has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical indicators, Mid Atlantic is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

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. Despite nearly stable fundamental indicators, Daiwa Securities is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Mid Atlantic and Daiwa Securities

The main advantage of trading using opposite Mid Atlantic and Daiwa Securities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mid Atlantic 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 Mid Atlantic Home Health 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.