Correlation Between Daedong Gear and Sungchang Autotech
Can any of the company-specific risk be diversified away by investing in both Daedong Gear and Sungchang Autotech 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 Sungchang Autotech 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 Sungchang Autotech Co, you can compare the effects of market volatilities on Daedong Gear and Sungchang Autotech 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 Sungchang Autotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daedong Gear and Sungchang Autotech.
Diversification Opportunities for Daedong Gear and Sungchang Autotech
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Daedong and Sungchang is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Daedong Gear Co and Sungchang Autotech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sungchang Autotech 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 Sungchang Autotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sungchang Autotech has no effect on the direction of Daedong Gear i.e., Daedong Gear and Sungchang Autotech go up and down completely randomly.
Pair Corralation between Daedong Gear and Sungchang Autotech
Assuming the 90 days trading horizon Daedong Gear Co is expected to generate 2.49 times more return on investment than Sungchang Autotech. However, Daedong Gear is 2.49 times more volatile than Sungchang Autotech Co. It trades about 0.04 of its potential returns per unit of risk. Sungchang Autotech Co is currently generating about -0.06 per unit of risk. If you would invest 726,294 in Daedong Gear Co on September 3, 2024 and sell it today you would earn a total of 394,706 from holding Daedong Gear Co or generate 54.35% 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. Sungchang Autotech Co
Performance |
| Timeline |
| Daedong Gear |
| Sungchang Autotech |
Daedong Gear and Sungchang Autotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daedong Gear and Sungchang Autotech
The main advantage of trading using opposite Daedong Gear and Sungchang Autotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daedong Gear position performs unexpectedly, Sungchang Autotech 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 Sungchang Autotech will offset losses from the drop in Sungchang Autotech's long position.| Daedong Gear vs. Sungchang Autotech Co | Daedong Gear vs. Amogreentech Co | Daedong Gear vs. Shin Steel Co | Daedong Gear vs. KMH Hitech Co |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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