Correlation Between Daelim Industrial and Cheryong Industrial
Can any of the company-specific risk be diversified away by investing in both Daelim Industrial and Cheryong Industrial 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 Daelim Industrial and Cheryong Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daelim Industrial Co and Cheryong Industrial CoLtd, you can compare the effects of market volatilities on Daelim Industrial and Cheryong Industrial 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 Daelim Industrial with a short position of Cheryong Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daelim Industrial and Cheryong Industrial.
Diversification Opportunities for Daelim Industrial and Cheryong Industrial
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Daelim and Cheryong is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Daelim Industrial Co and Cheryong Industrial CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheryong Industrial CoLtd and Daelim Industrial 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 Daelim Industrial Co are associated (or correlated) with Cheryong Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheryong Industrial CoLtd has no effect on the direction of Daelim Industrial i.e., Daelim Industrial and Cheryong Industrial go up and down completely randomly.
Pair Corralation between Daelim Industrial and Cheryong Industrial
Assuming the 90 days trading horizon Daelim Industrial Co is expected to under-perform the Cheryong Industrial. But the stock apears to be less risky and, when comparing its historical volatility, Daelim Industrial Co is 2.48 times less risky than Cheryong Industrial. The stock trades about -0.02 of its potential returns per unit of risk. The Cheryong Industrial CoLtd is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 354,895 in Cheryong Industrial CoLtd on August 29, 2024 and sell it today you would earn a total of 216,105 from holding Cheryong Industrial CoLtd or generate 60.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daelim Industrial Co vs. Cheryong Industrial CoLtd
Performance |
| Timeline |
| Daelim Industrial |
| Cheryong Industrial CoLtd |
Daelim Industrial and Cheryong Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daelim Industrial and Cheryong Industrial
The main advantage of trading using opposite Daelim Industrial and Cheryong Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daelim Industrial position performs unexpectedly, Cheryong Industrial 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 Cheryong Industrial will offset losses from the drop in Cheryong Industrial's long position.| Daelim Industrial vs. Samsung Electronics Co | Daelim Industrial vs. Samsung Electronics Co | Daelim Industrial vs. LG Energy Solution | Daelim Industrial vs. SK Hynix |
| Cheryong Industrial vs. iNtRON Biotechnology | Cheryong Industrial vs. Samsung Life Insurance | Cheryong Industrial vs. InfoBank | Cheryong Industrial vs. Lotte Chilsung Beverage |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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