Correlation Between Daios Plastics and General Commercial

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

Diversification Opportunities for Daios Plastics and General Commercial

0.4

Correlation Coefficient

Daios Plastics  General Commercial

Very weak diversification

The 3 months correlation between Daios and General is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Daios Plastics SA and General Commercial Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Commercial 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 General Commercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Commercial has no effect on the direction of Daios Plastics i.e., Daios Plastics and General Commercial go up and down completely randomly.

Pair Corralation between Daios Plastics and General Commercial

Assuming the 90 days trading horizon Daios Plastics SA is expected to generate 1.95 times more return on investment than General Commercial. However, Daios Plastics is 1.95 times more volatile than General Commercial Industrial. It trades about 0.17 of its potential returns per unit of risk. General Commercial Industrial is currently generating about 0.18 per unit of risk. If you would invest  362.00  in Daios Plastics SA on April 22, 2025 and sell it today you would earn a total of  158.00  from holding Daios Plastics SA or generate 43.65% return on investment over 90 days.

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

Daios Plastics SA  vs.  General Commercial Industrial

Daios Plastics SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Daios Plastics SA are ranked lower than 13 (%) 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.

General Commercial

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in General Commercial Industrial are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, General Commercial sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Daios Plastics and General Commercial

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

The idea behind Daios Plastics SA and General Commercial Industrial 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.