Correlation Between Daiyang Metal and Hwasung Industrial
Can any of the company-specific risk be diversified away by investing in both Daiyang Metal and Hwasung Industrial 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 Daiyang Metal and Hwasung Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daiyang Metal Co and Hwasung Industrial Co, you can compare the effects of market volatilities on Daiyang Metal and Hwasung Industrial 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 Daiyang Metal with a short position of Hwasung Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daiyang Metal and Hwasung Industrial.
Diversification Opportunities for Daiyang Metal and Hwasung Industrial
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Daiyang and Hwasung is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Daiyang Metal Co and Hwasung Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hwasung Industrial and Daiyang Metal 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 Daiyang Metal Co are associated (or correlated) with Hwasung Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hwasung Industrial has no effect on the direction of Daiyang Metal i.e., Daiyang Metal and Hwasung Industrial go up and down completely randomly.
Pair Corralation between Daiyang Metal and Hwasung Industrial
Assuming the 90 days trading horizon Daiyang Metal Co is expected to under-perform the Hwasung Industrial. In addition to that, Daiyang Metal is 2.25 times more volatile than Hwasung Industrial Co. It trades about -0.16 of its total potential returns per unit of risk. Hwasung Industrial Co is currently generating about -0.04 per unit of volatility. If you would invest 971,000 in Hwasung Industrial Co on October 28, 2024 and sell it today you would lose (10,000) from holding Hwasung Industrial Co or give up 1.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daiyang Metal Co vs. Hwasung Industrial Co
Performance |
| Timeline |
| Daiyang Metal |
| Hwasung Industrial |
Daiyang Metal and Hwasung Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daiyang Metal and Hwasung Industrial
The main advantage of trading using opposite Daiyang Metal and Hwasung Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daiyang Metal position performs unexpectedly, Hwasung Industrial 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 Hwasung Industrial will offset losses from the drop in Hwasung Industrial's long position.| Daiyang Metal vs. KB Financial Group | Daiyang Metal vs. Shinhan Financial Group | Daiyang Metal vs. Hana Financial | Daiyang Metal vs. Woori Financial Group |
| Hwasung Industrial vs. KB Financial Group | Hwasung Industrial vs. Shinhan Financial Group | Hwasung Industrial vs. Hana Financial | Hwasung Industrial vs. Woori Financial Group |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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