Correlation Between SH Energy and Daedong Metals
Can any of the company-specific risk be diversified away by investing in both SH Energy and Daedong Metals 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 SH Energy and Daedong Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SH Energy Chemical and Daedong Metals Co, you can compare the effects of market volatilities on SH Energy and Daedong Metals 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 SH Energy with a short position of Daedong Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of SH Energy and Daedong Metals.
Diversification Opportunities for SH Energy and Daedong Metals
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between 002360 and Daedong is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding SH Energy Chemical and Daedong Metals Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daedong Metals and SH Energy 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 SH Energy Chemical are associated (or correlated) with Daedong Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daedong Metals has no effect on the direction of SH Energy i.e., SH Energy and Daedong Metals go up and down completely randomly.
Pair Corralation between SH Energy and Daedong Metals
Assuming the 90 days trading horizon SH Energy Chemical is expected to under-perform the Daedong Metals. But the stock apears to be less risky and, when comparing its historical volatility, SH Energy Chemical is 1.49 times less risky than Daedong Metals. The stock trades about -0.07 of its potential returns per unit of risk. The Daedong Metals Co is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 834,000 in Daedong Metals Co on September 2, 2024 and sell it today you would lose (92,000) from holding Daedong Metals Co or give up 11.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SH Energy Chemical vs. Daedong Metals Co
Performance |
| Timeline |
| SH Energy Chemical |
| Daedong Metals |
SH Energy and Daedong Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SH Energy and Daedong Metals
The main advantage of trading using opposite SH Energy and Daedong Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SH Energy position performs unexpectedly, Daedong Metals 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 Daedong Metals will offset losses from the drop in Daedong Metals' long position.| SH Energy vs. AptaBio Therapeutics | SH Energy vs. Daewoo SBI SPAC | SH Energy vs. Dream Security co | SH Energy vs. Microfriend |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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