Correlation Between SunOpta and Daiwa Securities

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

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

Diversification Opportunities for SunOpta and Daiwa Securities

0.08

Correlation Coefficient

SunOpta  Daiwa Securities

Significant diversification

The 3 months correlation between SunOpta and Daiwa is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding SunOpta and Daiwa Securities Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daiwa Securities and SunOpta 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 SunOpta 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 SunOpta i.e., SunOpta and Daiwa Securities go up and down completely randomly.

Pair Corralation between SunOpta and Daiwa Securities

Given the investment horizon of 90 days SunOpta is expected to generate 1.46 times more return on investment than Daiwa Securities. However, SunOpta is 1.46 times more volatile than Daiwa Securities Group. It trades about 0.15 of its potential returns per unit of risk. Daiwa Securities Group is currently generating about 0.0 per unit of risk. If you would invest  589.00  in SunOpta on October 24, 2024 and sell it today you would earn a total of  141.00  from holding SunOpta or generate 23.94% return on investment over 90 days.

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

SunOpta  vs.  Daiwa Securities Group

SunOpta

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SunOpta are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward-looking signals, SunOpta disclosed solid returns over the last few months and may actually be approaching a breakup point.

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 SunOpta and Daiwa Securities

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

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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.