Correlation Between Daeduck Electronics and Jeju Semiconductor
Can any of the company-specific risk be diversified away by investing in both Daeduck Electronics and Jeju Semiconductor 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 Jeju Semiconductor 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 Jeju Semiconductor Corp, you can compare the effects of market volatilities on Daeduck Electronics and Jeju Semiconductor 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 Jeju Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daeduck Electronics and Jeju Semiconductor.
Diversification Opportunities for Daeduck Electronics and Jeju Semiconductor
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Daeduck and Jeju is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Daeduck Electronics Co and Jeju Semiconductor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeju Semiconductor Corp 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 Jeju Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jeju Semiconductor Corp has no effect on the direction of Daeduck Electronics i.e., Daeduck Electronics and Jeju Semiconductor go up and down completely randomly.
Pair Corralation between Daeduck Electronics and Jeju Semiconductor
Assuming the 90 days trading horizon Daeduck Electronics is expected to generate 7.43 times less return on investment than Jeju Semiconductor. But when comparing it to its historical volatility, Daeduck Electronics Co is 5.35 times less risky than Jeju Semiconductor. It trades about 0.07 of its potential returns per unit of risk. Jeju Semiconductor Corp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 922,000 in Jeju Semiconductor Corp on October 20, 2024 and sell it today you would earn a total of 55,000 from holding Jeju Semiconductor Corp or generate 5.97% 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. Jeju Semiconductor Corp
Performance |
| Timeline |
| Daeduck Electronics |
| Jeju Semiconductor Corp |
Daeduck Electronics and Jeju Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daeduck Electronics and Jeju Semiconductor
The main advantage of trading using opposite Daeduck Electronics and Jeju Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daeduck Electronics position performs unexpectedly, Jeju Semiconductor 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 Jeju Semiconductor will offset losses from the drop in Jeju Semiconductor's long position.The idea behind Daeduck Electronics Co and Jeju Semiconductor Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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