Correlation Between Daiyang Metal and Daejung Chemicals
Can any of the company-specific risk be diversified away by investing in both Daiyang Metal and Daejung Chemicals 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 Daejung Chemicals 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 Daejung Chemicals Metals, you can compare the effects of market volatilities on Daiyang Metal and Daejung Chemicals 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 Daejung Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daiyang Metal and Daejung Chemicals.
Diversification Opportunities for Daiyang Metal and Daejung Chemicals
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Daiyang and Daejung is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Daiyang Metal Co and Daejung Chemicals Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daejung Chemicals Metals 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 Daejung Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daejung Chemicals Metals has no effect on the direction of Daiyang Metal i.e., Daiyang Metal and Daejung Chemicals go up and down completely randomly.
Pair Corralation between Daiyang Metal and Daejung Chemicals
Assuming the 90 days trading horizon Daiyang Metal Co is expected to generate 1.73 times more return on investment than Daejung Chemicals. However, Daiyang Metal is 1.73 times more volatile than Daejung Chemicals Metals. It trades about -0.08 of its potential returns per unit of risk. Daejung Chemicals Metals is currently generating about -0.15 per unit of risk. If you would invest 168,000 in Daiyang Metal Co on August 24, 2024 and sell it today you would lose (10,500) from holding Daiyang Metal Co or give up 6.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daiyang Metal Co vs. Daejung Chemicals Metals
Performance |
| Timeline |
| Daiyang Metal |
| Daejung Chemicals Metals |
Daiyang Metal and Daejung Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daiyang Metal and Daejung Chemicals
The main advantage of trading using opposite Daiyang Metal and Daejung Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daiyang Metal position performs unexpectedly, Daejung Chemicals 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 Daejung Chemicals will offset losses from the drop in Daejung Chemicals' long position.| Daiyang Metal vs. AptaBio Therapeutics | Daiyang Metal vs. Daewoo SBI SPAC | Daiyang Metal vs. Dream Security co | Daiyang Metal vs. Microfriend |
| Daejung Chemicals vs. LG Chem | Daejung Chemicals vs. Chunbo Co | Daejung Chemicals vs. DukSan Neolux CoLtd | Daejung Chemicals vs. Hyosung Chemical Corp |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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