Correlation Between Daito Trust and AIR LIQUIDE

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

By analyzing existing cross correlation between Daito Trust Construction and AIR LIQUIDE ADR, you can compare the effects of market volatilities on Daito Trust and AIR LIQUIDE 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 Daito Trust with a short position of AIR LIQUIDE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daito Trust and AIR LIQUIDE.

Diversification Opportunities for Daito Trust and AIR LIQUIDE

-0.14

Correlation Coefficient

Daito Trust  AIR LIQUIDE

Good diversification

The 3 months correlation between Daito and AIR is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Daito Trust Construction and AIR LIQUIDE ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIR LIQUIDE ADR and Daito Trust 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 Daito Trust Construction are associated (or correlated) with AIR LIQUIDE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIR LIQUIDE ADR has no effect on the direction of Daito Trust i.e., Daito Trust and AIR LIQUIDE go up and down completely randomly.

Pair Corralation between Daito Trust and AIR LIQUIDE

Assuming the 90 days horizon Daito Trust Construction is expected to generate 1.16 times more return on investment than AIR LIQUIDE. However, Daito Trust is 1.16 times more volatile than AIR LIQUIDE ADR. It trades about -0.01 of its potential returns per unit of risk. AIR LIQUIDE ADR is currently generating about -0.22 per unit of risk. If you would invest  10,800  in Daito Trust Construction on September 29, 2024 and sell it today you would lose (100.00) from holding Daito Trust Construction or give up 0.93% of portfolio value over 90 days.

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

Daito Trust Construction  vs.  AIR LIQUIDE ADR

Daito Trust Construction

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Daito Trust Construction has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Daito Trust is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

AIR LIQUIDE ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AIR LIQUIDE ADR 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 essential 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.

Pair Trading with Daito Trust and AIR LIQUIDE

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

The idea behind Daito Trust Construction and AIR LIQUIDE ADR 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.