Correlation Between Daedong Gear and Daou Data
Can any of the company-specific risk be diversified away by investing in both Daedong Gear and Daou Data 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 Daedong Gear and Daou Data into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daedong Gear Co and Daou Data Corp, you can compare the effects of market volatilities on Daedong Gear and Daou Data 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 Daedong Gear with a short position of Daou Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daedong Gear and Daou Data.
Diversification Opportunities for Daedong Gear and Daou Data
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Daedong and Daou is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Daedong Gear Co and Daou Data Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daou Data Corp and Daedong Gear 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 Daedong Gear Co are associated (or correlated) with Daou Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daou Data Corp has no effect on the direction of Daedong Gear i.e., Daedong Gear and Daou Data go up and down completely randomly.
Pair Corralation between Daedong Gear and Daou Data
Assuming the 90 days trading horizon Daedong Gear Co is expected to generate 1.55 times more return on investment than Daou Data. However, Daedong Gear is 1.55 times more volatile than Daou Data Corp. It trades about 0.05 of its potential returns per unit of risk. Daou Data Corp is currently generating about -0.04 per unit of risk. If you would invest 733,230 in Daedong Gear Co on September 4, 2024 and sell it today you would earn a total of 793,770 from holding Daedong Gear Co or generate 108.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daedong Gear Co vs. Daou Data Corp
Performance |
| Timeline |
| Daedong Gear |
| Daou Data Corp |
Daedong Gear and Daou Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daedong Gear and Daou Data
The main advantage of trading using opposite Daedong Gear and Daou Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daedong Gear position performs unexpectedly, Daou Data 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 Daou Data will offset losses from the drop in Daou Data's long position.| Daedong Gear vs. Daou Data Corp | Daedong Gear vs. Ssangyong Information Communication | Daedong Gear vs. Sung Bo Chemicals | Daedong Gear vs. DataSolution |
| Daou Data vs. Dongjin Semichem Co | Daou Data vs. AhnLab Inc | Daou Data vs. Posco ICT | Daou Data vs. CJ ENM |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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