Correlation Between Daiyang Metal and Sewoon Medical
Can any of the company-specific risk be diversified away by investing in both Daiyang Metal and Sewoon Medical 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 Sewoon Medical 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 Sewoon Medical Co, you can compare the effects of market volatilities on Daiyang Metal and Sewoon Medical 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 Sewoon Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daiyang Metal and Sewoon Medical.
Diversification Opportunities for Daiyang Metal and Sewoon Medical
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Daiyang and Sewoon is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Daiyang Metal Co and Sewoon Medical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sewoon Medical 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 Sewoon Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sewoon Medical has no effect on the direction of Daiyang Metal i.e., Daiyang Metal and Sewoon Medical go up and down completely randomly.
Pair Corralation between Daiyang Metal and Sewoon Medical
Assuming the 90 days trading horizon Daiyang Metal Co is expected to generate 3.23 times more return on investment than Sewoon Medical. However, Daiyang Metal is 3.23 times more volatile than Sewoon Medical Co. It trades about 0.0 of its potential returns per unit of risk. Sewoon Medical Co is currently generating about -0.01 per unit of risk. If you would invest 320,000 in Daiyang Metal Co on October 17, 2024 and sell it today you would lose (161,000) from holding Daiyang Metal Co or give up 50.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.96% |
| Values | Daily Returns |
Daiyang Metal Co vs. Sewoon Medical Co
Performance |
| Timeline |
| Daiyang Metal |
| Sewoon Medical |
Daiyang Metal and Sewoon Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daiyang Metal and Sewoon Medical
The main advantage of trading using opposite Daiyang Metal and Sewoon Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daiyang Metal position performs unexpectedly, Sewoon Medical 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 Sewoon Medical will offset losses from the drop in Sewoon Medical's long position.| Daiyang Metal vs. Jeil Steel Mfg | Daiyang Metal vs. Han Kook Steel | Daiyang Metal vs. Fine Besteel Co | Daiyang Metal vs. Koh Young Technology |
| Sewoon Medical vs. Daiyang Metal Co | Sewoon Medical vs. Dongbang Transport Logistics | Sewoon Medical vs. Daishin Information Communications | Sewoon Medical vs. PJ Metal Co |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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