Correlation Between Tae Kyung and Duksan Hi
Can any of the company-specific risk be diversified away by investing in both Tae Kyung and Duksan Hi 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 Duksan Hi 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 Duksan Hi Metal, you can compare the effects of market volatilities on Tae Kyung and Duksan Hi 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 Duksan Hi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tae Kyung and Duksan Hi.
Diversification Opportunities for Tae Kyung and Duksan Hi
Very weak diversification
The 3 months correlation between Tae and Duksan is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Tae Kyung Chemical and Duksan Hi Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duksan Hi Metal 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 Duksan Hi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Duksan Hi Metal has no effect on the direction of Tae Kyung i.e., Tae Kyung and Duksan Hi go up and down completely randomly.
Pair Corralation between Tae Kyung and Duksan Hi
Assuming the 90 days trading horizon Tae Kyung is expected to generate 2.68 times less return on investment than Duksan Hi. But when comparing it to its historical volatility, Tae Kyung Chemical is 1.47 times less risky than Duksan Hi. It trades about 0.23 of its potential returns per unit of risk. Duksan Hi Metal is currently generating about 0.42 of returns per unit of risk over similar time horizon. If you would invest 341,500 in Duksan Hi Metal on October 11, 2024 and sell it today you would earn a total of 78,000 from holding Duksan Hi Metal or generate 22.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tae Kyung Chemical vs. Duksan Hi Metal
Performance |
| Timeline |
| Tae Kyung Chemical |
| Duksan Hi Metal |
Tae Kyung and Duksan Hi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tae Kyung and Duksan Hi
The main advantage of trading using opposite Tae Kyung and Duksan Hi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tae Kyung position performs unexpectedly, Duksan Hi 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 Duksan Hi will offset losses from the drop in Duksan Hi's long position.| Tae Kyung vs. Dongil Metal Co | Tae Kyung vs. Eagon Industrial Co | Tae Kyung vs. INNOX Advanced Materials | Tae Kyung vs. Ssangyong Materials Corp |
| Duksan Hi vs. Jeju Bank | Duksan Hi vs. Adaptive Plasma Technology | Duksan Hi vs. Korea Shipbuilding Offshore | Duksan Hi vs. InfoBank |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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