Correlation Between Gap, and Daito Trust

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

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

Diversification Opportunities for Gap, and Daito Trust

-0.5

Correlation Coefficient

Gap,  Daito Trust

Very good diversification

The 3 months correlation between Gap, and Daito is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding The Gap, and Daito Trust Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daito Trust Construction and Gap, 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 The Gap, are associated (or correlated) with Daito Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daito Trust Construction has no effect on the direction of Gap, i.e., Gap, and Daito Trust go up and down completely randomly.

Pair Corralation between Gap, and Daito Trust

Considering the 90-day investment horizon The Gap, is expected to generate 1.68 times more return on investment than Daito Trust. However, Gap, is 1.68 times more volatile than Daito Trust Construction. It trades about 0.12 of its potential returns per unit of risk. Daito Trust Construction is currently generating about -0.08 per unit of risk. If you would invest  2,116  in The Gap, on September 5, 2024 and sell it today you would earn a total of  463.00  from holding The Gap, or generate 21.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

The Gap,  vs.  Daito Trust Construction

Gap,

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Gap, are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Gap, reported solid returns over the last few months and may actually be approaching a breakup point.

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 latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Gap, and Daito Trust

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

The idea behind The Gap, and Daito Trust Construction 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.