Correlation Between Strix Group and Daiwa House

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

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

Diversification Opportunities for Strix Group and Daiwa House

-0.65

Correlation Coefficient

Strix Group  Daiwa House

Excellent diversification

The 3 months correlation between Strix and Daiwa is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Strix Group Plc and Daiwa House Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daiwa House Industry and Strix Group 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 Strix Group Plc are associated (or correlated) with Daiwa House. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daiwa House Industry has no effect on the direction of Strix Group i.e., Strix Group and Daiwa House go up and down completely randomly.

Pair Corralation between Strix Group and Daiwa House

Assuming the 90 days horizon Strix Group Plc is expected to under-perform the Daiwa House. In addition to that, Strix Group is 2.11 times more volatile than Daiwa House Industry. It trades about -0.02 of its total potential returns per unit of risk. Daiwa House Industry is currently generating about 0.04 per unit of volatility. If you would invest  2,160  in Daiwa House Industry on September 23, 2024 and sell it today you would earn a total of  720.00  from holding Daiwa House Industry or generate 33.33% return on investment over 90 days.

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

Strix Group Plc  vs.  Daiwa House Industry

Strix Group Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Strix Group Plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Daiwa House Industry

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Daiwa House Industry are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Daiwa House is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Strix Group and Daiwa House

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

The idea behind Strix Group Plc and Daiwa House Industry 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.