Correlation Between Daios Plastics and Centric Holdings

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

By analyzing existing cross correlation between Daios Plastics SA and Centric Holdings SA, you can compare the effects of market volatilities on Daios Plastics and Centric Holdings 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 Daios Plastics with a short position of Centric Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daios Plastics and Centric Holdings.

Diversification Opportunities for Daios Plastics and Centric Holdings

-0.66

Correlation Coefficient

Daios Plastics  Centric Holdings

Excellent diversification

The 3 months correlation between Daios and Centric is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Daios Plastics SA and Centric Holdings SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centric Holdings and Daios Plastics 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 Daios Plastics SA are associated (or correlated) with Centric Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centric Holdings has no effect on the direction of Daios Plastics i.e., Daios Plastics and Centric Holdings go up and down completely randomly.

Pair Corralation between Daios Plastics and Centric Holdings

Assuming the 90 days trading horizon Daios Plastics SA is expected to generate 4.32 times more return on investment than Centric Holdings. However, Daios Plastics is 4.32 times more volatile than Centric Holdings SA. It trades about 0.04 of its potential returns per unit of risk. Centric Holdings SA is currently generating about -0.06 per unit of risk. If you would invest  348.00  in Daios Plastics SA on September 5, 2024 and sell it today you would earn a total of  10.00  from holding Daios Plastics SA or generate 2.87% return on investment over 90 days.

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

Daios Plastics SA  vs.  Centric Holdings SA

Daios Plastics SA

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Daios Plastics SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Daios Plastics sustained solid returns over the last few months and may actually be approaching a breakup point.

Centric Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Centric Holdings SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Daios Plastics and Centric Holdings

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

The idea behind Daios Plastics SA and Centric Holdings SA 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.