Correlation Between Daelim Trading and Daekyung Machinery
Can any of the company-specific risk be diversified away by investing in both Daelim Trading and Daekyung Machinery 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 Trading and Daekyung Machinery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daelim Trading Co and Daekyung Machinery Engineering, you can compare the effects of market volatilities on Daelim Trading and Daekyung Machinery 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 Trading with a short position of Daekyung Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daelim Trading and Daekyung Machinery.
Diversification Opportunities for Daelim Trading and Daekyung Machinery
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Daelim and Daekyung is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Daelim Trading Co and Daekyung Machinery Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daekyung Machinery and Daelim Trading 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 Trading Co are associated (or correlated) with Daekyung Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daekyung Machinery has no effect on the direction of Daelim Trading i.e., Daelim Trading and Daekyung Machinery go up and down completely randomly.
Pair Corralation between Daelim Trading and Daekyung Machinery
Assuming the 90 days trading horizon Daelim Trading Co is expected to under-perform the Daekyung Machinery. But the stock apears to be less risky and, when comparing its historical volatility, Daelim Trading Co is 1.2 times less risky than Daekyung Machinery. The stock trades about -0.04 of its potential returns per unit of risk. The Daekyung Machinery Engineering is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 39,100 in Daekyung Machinery Engineering on September 3, 2024 and sell it today you would earn a total of 12,400 from holding Daekyung Machinery Engineering or generate 31.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 92.68% |
| Values | Daily Returns |
Daelim Trading Co vs. Daekyung Machinery Engineering
Performance |
| Timeline |
| Daelim Trading |
| Daekyung Machinery |
Daelim Trading and Daekyung Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daelim Trading and Daekyung Machinery
The main advantage of trading using opposite Daelim Trading and Daekyung Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daelim Trading position performs unexpectedly, Daekyung Machinery 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 Daekyung Machinery will offset losses from the drop in Daekyung Machinery's long position.| Daelim Trading vs. Daishin Information Communications | Daelim Trading vs. Hana Financial | Daelim Trading vs. Automobile Pc | Daelim Trading vs. KakaoBank Corp |
| Daekyung Machinery vs. Haesung Industrial Co | Daekyung Machinery vs. Polaris Office Corp | Daekyung Machinery vs. Wireless Power Amplifier | Daekyung Machinery vs. Cheryong Industrial CoLtd |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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