Correlation Between Daedong Gear and Innowireless
Can any of the company-specific risk be diversified away by investing in both Daedong Gear and Innowireless 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 Innowireless 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 Innowireless Co, you can compare the effects of market volatilities on Daedong Gear and Innowireless 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 Innowireless. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daedong Gear and Innowireless.
Diversification Opportunities for Daedong Gear and Innowireless
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Daedong and Innowireless is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Daedong Gear Co and Innowireless Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innowireless 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 Innowireless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innowireless has no effect on the direction of Daedong Gear i.e., Daedong Gear and Innowireless go up and down completely randomly.
Pair Corralation between Daedong Gear and Innowireless
Assuming the 90 days trading horizon Daedong Gear Co is expected to generate 2.29 times more return on investment than Innowireless. However, Daedong Gear is 2.29 times more volatile than Innowireless Co. It trades about 0.09 of its potential returns per unit of risk. Innowireless Co is currently generating about -0.04 per unit of risk. If you would invest 688,712 in Daedong Gear Co on September 12, 2024 and sell it today you would earn a total of 916,288 from holding Daedong Gear Co or generate 133.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 96.37% |
| Values | Daily Returns |
Daedong Gear Co vs. Innowireless Co
Performance |
| Timeline |
| Daedong Gear |
| Innowireless |
Daedong Gear and Innowireless Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daedong Gear and Innowireless
The main advantage of trading using opposite Daedong Gear and Innowireless positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daedong Gear position performs unexpectedly, Innowireless 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 Innowireless will offset losses from the drop in Innowireless' long position.| Daedong Gear vs. Innowireless Co | Daedong Gear vs. Shinsung Delta Tech | Daedong Gear vs. Amogreentech Co | Daedong Gear vs. Hwangkum Steel Technology |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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