Correlation Between Daiyang Metal and Sungwoo Electronics
Can any of the company-specific risk be diversified away by investing in both Daiyang Metal and Sungwoo Electronics 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 Sungwoo Electronics 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 Sungwoo Electronics Co, you can compare the effects of market volatilities on Daiyang Metal and Sungwoo Electronics 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 Sungwoo Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daiyang Metal and Sungwoo Electronics.
Diversification Opportunities for Daiyang Metal and Sungwoo Electronics
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Daiyang and Sungwoo is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Daiyang Metal Co and Sungwoo Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sungwoo Electronics 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 Sungwoo Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sungwoo Electronics has no effect on the direction of Daiyang Metal i.e., Daiyang Metal and Sungwoo Electronics go up and down completely randomly.
Pair Corralation between Daiyang Metal and Sungwoo Electronics
Assuming the 90 days trading horizon Daiyang Metal Co is expected to generate 1.19 times more return on investment than Sungwoo Electronics. However, Daiyang Metal is 1.19 times more volatile than Sungwoo Electronics Co. It trades about -0.01 of its potential returns per unit of risk. Sungwoo Electronics Co is currently generating about -0.34 per unit of risk. If you would invest 161,600 in Daiyang Metal Co on September 5, 2024 and sell it today you would lose (2,600) from holding Daiyang Metal Co or give up 1.61% 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. Sungwoo Electronics Co
Performance |
| Timeline |
| Daiyang Metal |
| Sungwoo Electronics |
Daiyang Metal and Sungwoo Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daiyang Metal and Sungwoo Electronics
The main advantage of trading using opposite Daiyang Metal and Sungwoo Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daiyang Metal position performs unexpectedly, Sungwoo Electronics 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 Sungwoo Electronics will offset losses from the drop in Sungwoo Electronics' long position.| Daiyang Metal vs. Daishin Information Communications | Daiyang Metal vs. Nable Communications | Daiyang Metal vs. Samhyun Steel Co | Daiyang Metal vs. Dong A Steel Technology |
| Sungwoo Electronics vs. Seoam Machinery Industry | Sungwoo Electronics vs. Hanjoo Light Metal | Sungwoo Electronics vs. Daiyang Metal Co | Sungwoo Electronics vs. Youngsin Metal Industrial |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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