Correlation Between Daito Trust and Australian Agricultural

Can any of the company-specific risk be diversified away by investing in both Daito Trust and Australian Agricultural 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 Australian Agricultural 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 Australian Agricultural, you can compare the effects of market volatilities on Daito Trust and Australian Agricultural 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 Australian Agricultural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daito Trust and Australian Agricultural.

Diversification Opportunities for Daito Trust and Australian Agricultural

-0.01

Correlation Coefficient

Daito Trust  Australian Agricultural

Good diversification

The 3 months correlation between Daito and Australian is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Daito Trust Construction and Australian Agricultural in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Agricultural 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 Australian Agricultural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Agricultural has no effect on the direction of Daito Trust i.e., Daito Trust and Australian Agricultural go up and down completely randomly.

Pair Corralation between Daito Trust and Australian Agricultural

Assuming the 90 days horizon Daito Trust Construction is expected to generate 0.71 times more return on investment than Australian Agricultural. However, Daito Trust Construction is 1.4 times less risky than Australian Agricultural. It trades about -0.01 of its potential returns per unit of risk. Australian Agricultural is currently generating about -0.04 per unit of risk. If you would invest  10,800  in Daito Trust Construction on September 28, 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.  Australian Agricultural

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 newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Australian Agricultural

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Daito Trust and Australian Agricultural

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

The idea behind Daito Trust Construction and Australian Agricultural 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.