Correlation Between Daishin Information and Haitai Confectionery

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

By analyzing existing cross correlation between Daishin Information Communications and Haitai Confectionery Foods, you can compare the effects of market volatilities on Daishin Information and Haitai Confectionery 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 Daishin Information with a short position of Haitai Confectionery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daishin Information and Haitai Confectionery.

Diversification Opportunities for Daishin Information and Haitai Confectionery

0.52

Correlation Coefficient

Daishin Information  Haitai Confectionery

Very weak diversification

The 3 months correlation between Daishin and Haitai is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Daishin Information Communicat and Haitai Confectionery Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haitai Confectionery and Daishin Information 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 Daishin Information Communications are associated (or correlated) with Haitai Confectionery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haitai Confectionery has no effect on the direction of Daishin Information i.e., Daishin Information and Haitai Confectionery go up and down completely randomly.

Pair Corralation between Daishin Information and Haitai Confectionery

Assuming the 90 days trading horizon Daishin Information Communications is expected to generate 1.87 times more return on investment than Haitai Confectionery. However, Daishin Information is 1.87 times more volatile than Haitai Confectionery Foods. It trades about 0.07 of its potential returns per unit of risk. Haitai Confectionery Foods is currently generating about 0.06 per unit of risk. If you would invest  92,000  in Daishin Information Communications on September 27, 2024 and sell it today you would earn a total of  12,200  from holding Daishin Information Communications or generate 13.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Daishin Information Communicat  vs.  Haitai Confectionery Foods

Daishin Information

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Daishin Information Communications are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Daishin Information sustained solid returns over the last few months and may actually be approaching a breakup point.

Haitai Confectionery

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Haitai Confectionery Foods are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Haitai Confectionery may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Daishin Information and Haitai Confectionery

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

The idea behind Daishin Information Communications and Haitai Confectionery Foods 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.