Correlation Between SH Energy and Daejung Chemicals
Can any of the company-specific risk be diversified away by investing in both SH Energy and Daejung Chemicals 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 Daejung Chemicals 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 Daejung Chemicals Metals, you can compare the effects of market volatilities on SH Energy and Daejung Chemicals 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 Daejung Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of SH Energy and Daejung Chemicals.
Diversification Opportunities for SH Energy and Daejung Chemicals
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between 002360 and Daejung is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding SH Energy Chemical and Daejung Chemicals Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daejung Chemicals 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 Daejung Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daejung Chemicals Metals has no effect on the direction of SH Energy i.e., SH Energy and Daejung Chemicals go up and down completely randomly.
Pair Corralation between SH Energy and Daejung Chemicals
Assuming the 90 days trading horizon SH Energy Chemical is expected to generate 2.19 times more return on investment than Daejung Chemicals. However, SH Energy is 2.19 times more volatile than Daejung Chemicals Metals. It trades about 0.06 of its potential returns per unit of risk. Daejung Chemicals Metals is currently generating about -0.32 per unit of risk. If you would invest 50,900 in SH Energy Chemical on September 1, 2024 and sell it today you would earn a total of 1,800 from holding SH Energy Chemical or generate 3.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SH Energy Chemical vs. Daejung Chemicals Metals
Performance |
| Timeline |
| SH Energy Chemical |
| Daejung Chemicals Metals |
SH Energy and Daejung Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SH Energy and Daejung Chemicals
The main advantage of trading using opposite SH Energy and Daejung Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SH Energy position performs unexpectedly, Daejung Chemicals 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 Daejung Chemicals will offset losses from the drop in Daejung Chemicals' long position.| SH Energy vs. Air Busan Co | SH Energy vs. Jeju Air Co | SH Energy vs. Cube Entertainment | SH Energy vs. MEDIANA CoLtd |
| Daejung Chemicals vs. LG Chem | Daejung Chemicals vs. Chunbo Co | Daejung Chemicals vs. Hyosung Chemical Corp | Daejung Chemicals vs. LIG ES SPAC |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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