Correlation Between Tae Kyung and Daejoo
Can any of the company-specific risk be diversified away by investing in both Tae Kyung 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 Tae Kyung and Daejoo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tae Kyung Chemical and Daejoo Inc, you can compare the effects of market volatilities on Tae Kyung 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 Tae Kyung with a short position of Daejoo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tae Kyung and Daejoo.
Diversification Opportunities for Tae Kyung and Daejoo
Average diversification
The 3 months correlation between Tae and Daejoo is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Tae Kyung Chemical and Daejoo Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daejoo Inc and Tae Kyung 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 Tae Kyung Chemical 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 Tae Kyung i.e., Tae Kyung and Daejoo go up and down completely randomly.
Pair Corralation between Tae Kyung and Daejoo
Assuming the 90 days trading horizon Tae Kyung is expected to generate 3.48 times less return on investment than Daejoo. But when comparing it to its historical volatility, Tae Kyung Chemical is 1.22 times less risky than Daejoo. It trades about 0.08 of its potential returns per unit of risk. Daejoo Inc is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 130,500 in Daejoo Inc on September 14, 2024 and sell it today you would earn a total of 14,100 from holding Daejoo Inc or generate 10.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Tae Kyung Chemical vs. Daejoo Inc
Performance |
| Timeline |
| Tae Kyung Chemical |
| Daejoo Inc |
Tae Kyung and Daejoo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tae Kyung and Daejoo
The main advantage of trading using opposite Tae Kyung and Daejoo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tae Kyung 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.| Tae Kyung vs. Ecoplastic | Tae Kyung vs. Hyosung Advanced Materials | Tae Kyung vs. LG Household Healthcare | Tae Kyung vs. Hyundai Engineering Plastics |
| Daejoo vs. HB Technology TD | Daejoo vs. People Technology | Daejoo vs. CKH Food Health | Daejoo vs. Dong A Steel Technology |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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