Correlation Between Daeduck Electronics and Iljin Materials
Can any of the company-specific risk be diversified away by investing in both Daeduck Electronics and Iljin Materials 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 Daeduck Electronics and Iljin Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daeduck Electronics Co and Iljin Materials Co, you can compare the effects of market volatilities on Daeduck Electronics and Iljin Materials 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 Daeduck Electronics with a short position of Iljin Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daeduck Electronics and Iljin Materials.
Diversification Opportunities for Daeduck Electronics and Iljin Materials
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Daeduck and Iljin is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Daeduck Electronics Co and Iljin Materials Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iljin Materials and Daeduck Electronics 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 Daeduck Electronics Co are associated (or correlated) with Iljin Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iljin Materials has no effect on the direction of Daeduck Electronics i.e., Daeduck Electronics and Iljin Materials go up and down completely randomly.
Pair Corralation between Daeduck Electronics and Iljin Materials
Assuming the 90 days trading horizon Daeduck Electronics Co is expected to generate 0.21 times more return on investment than Iljin Materials. However, Daeduck Electronics Co is 4.84 times less risky than Iljin Materials. It trades about 0.07 of its potential returns per unit of risk. Iljin Materials Co is currently generating about -0.11 per unit of risk. If you would invest 626,000 in Daeduck Electronics Co on September 3, 2024 and sell it today you would earn a total of 44,000 from holding Daeduck Electronics Co or generate 7.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daeduck Electronics Co vs. Iljin Materials Co
Performance |
| Timeline |
| Daeduck Electronics |
| Iljin Materials |
Daeduck Electronics and Iljin Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daeduck Electronics and Iljin Materials
The main advantage of trading using opposite Daeduck Electronics and Iljin Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daeduck Electronics position performs unexpectedly, Iljin Materials 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 Iljin Materials will offset losses from the drop in Iljin Materials' long position.| Daeduck Electronics vs. Kukil Metal Co | Daeduck Electronics vs. Display Tech Co | Daeduck Electronics vs. Seoyon Topmetal Co | Daeduck Electronics vs. Formetal Co |
| Iljin Materials vs. Samsung Electronics Co | Iljin Materials vs. Samsung Electronics Co | Iljin Materials vs. LG Energy Solution | Iljin Materials vs. SK Hynix |
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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