Correlation Between Taeyang Metal and Daejoo
Can any of the company-specific risk be diversified away by investing in both Taeyang Metal and Daejoo 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 Taeyang Metal and Daejoo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taeyang Metal Industrial and Daejoo Inc, you can compare the effects of market volatilities on Taeyang Metal and Daejoo 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 Taeyang Metal with a short position of Daejoo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taeyang Metal and Daejoo.
Diversification Opportunities for Taeyang Metal and Daejoo
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Taeyang and Daejoo is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Taeyang Metal Industrial and Daejoo Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daejoo Inc and Taeyang Metal 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 Taeyang Metal Industrial are associated (or correlated) with Daejoo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daejoo Inc has no effect on the direction of Taeyang Metal i.e., Taeyang Metal and Daejoo go up and down completely randomly.
Pair Corralation between Taeyang Metal and Daejoo
Assuming the 90 days trading horizon Taeyang Metal Industrial is expected to generate 2.78 times more return on investment than Daejoo. However, Taeyang Metal is 2.78 times more volatile than Daejoo Inc. It trades about 0.05 of its potential returns per unit of risk. Daejoo Inc is currently generating about 0.03 per unit of risk. If you would invest 463,500 in Taeyang Metal Industrial on September 12, 2024 and sell it today you would earn a total of 35,000 from holding Taeyang Metal Industrial or generate 7.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.31% |
| Values | Daily Returns |
Taeyang Metal Industrial vs. Daejoo Inc
Performance |
| Timeline |
| Taeyang Metal Industrial |
| Daejoo Inc |
Taeyang Metal and Daejoo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taeyang Metal and Daejoo
The main advantage of trading using opposite Taeyang Metal and Daejoo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taeyang Metal position performs unexpectedly, Daejoo 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 Daejoo will offset losses from the drop in Daejoo's long position.| Taeyang Metal vs. Samsung Electronics Co | Taeyang Metal vs. Samsung Electronics Co | Taeyang Metal vs. SK Hynix | Taeyang Metal vs. POSCO Holdings |
| Daejoo vs. Sejong Telecom | Daejoo vs. Korea Petro Chemical | Daejoo vs. Daishin Information Communications | Daejoo vs. Tae Kyung Chemical |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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