Correlation Between Daiyang Metal and Homecast CoLtd
Can any of the company-specific risk be diversified away by investing in both Daiyang Metal and Homecast CoLtd 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 Homecast CoLtd 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 Homecast CoLtd, you can compare the effects of market volatilities on Daiyang Metal and Homecast CoLtd 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 Homecast CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daiyang Metal and Homecast CoLtd.
Diversification Opportunities for Daiyang Metal and Homecast CoLtd
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Daiyang and Homecast is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Daiyang Metal Co and Homecast CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Homecast CoLtd 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 Homecast CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Homecast CoLtd has no effect on the direction of Daiyang Metal i.e., Daiyang Metal and Homecast CoLtd go up and down completely randomly.
Pair Corralation between Daiyang Metal and Homecast CoLtd
Assuming the 90 days trading horizon Daiyang Metal Co is expected to generate 1.06 times more return on investment than Homecast CoLtd. However, Daiyang Metal is 1.06 times more volatile than Homecast CoLtd. It trades about -0.17 of its potential returns per unit of risk. Homecast CoLtd is currently generating about -0.33 per unit of risk. If you would invest 169,000 in Daiyang Metal Co on October 16, 2024 and sell it today you would lose (15,200) from holding Daiyang Metal Co or give up 8.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daiyang Metal Co vs. Homecast CoLtd
Performance |
| Timeline |
| Daiyang Metal |
| Homecast CoLtd |
Daiyang Metal and Homecast CoLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daiyang Metal and Homecast CoLtd
The main advantage of trading using opposite Daiyang Metal and Homecast CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daiyang Metal position performs unexpectedly, Homecast CoLtd 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 Homecast CoLtd will offset losses from the drop in Homecast CoLtd's long position.| Daiyang Metal vs. Hanmi Semiconductor Co | Daiyang Metal vs. ITM Semiconductor Co | Daiyang Metal vs. PI Advanced Materials | Daiyang Metal vs. Seoul Semiconductor Co |
| Homecast CoLtd vs. Duksan Hi Metal | Homecast CoLtd vs. Formetal Co | Homecast CoLtd vs. Daiyang Metal Co | Homecast CoLtd vs. Daejung Chemicals Metals |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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