Correlation Between Daios Plastics and Profile Systems

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

Diversification Opportunities for Daios Plastics and Profile Systems

0.66

Correlation Coefficient

Daios Plastics  Profile Systems

Poor diversification

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

Pair Corralation between Daios Plastics and Profile Systems

Assuming the 90 days trading horizon Daios Plastics SA is expected to generate 2.02 times more return on investment than Profile Systems. However, Daios Plastics is 2.02 times more volatile than Profile Systems Software. It trades about 0.18 of its potential returns per unit of risk. Profile Systems Software is currently generating about 0.33 per unit of risk. If you would invest  390.00  in Daios Plastics SA on May 9, 2025 and sell it today you would earn a total of  155.00  from holding Daios Plastics SA or generate 39.74% return on investment over 90 days.

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

Daios Plastics SA  vs.  Profile Systems Software

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 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Daios Plastics sustained solid returns over the last few months and may actually be approaching a breakup point.

Profile Systems Software

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Profile Systems Software are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Profile Systems unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Daios Plastics and Profile Systems

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

The idea behind Daios Plastics SA and Profile Systems Software 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.

Check out your portfolio center.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.