Correlation Between Daiyang Metal and Hwashin Precision
Can any of the company-specific risk be diversified away by investing in both Daiyang Metal and Hwashin Precision 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 Hwashin Precision 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 Hwashin Precision Engineering, you can compare the effects of market volatilities on Daiyang Metal and Hwashin Precision 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 Hwashin Precision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daiyang Metal and Hwashin Precision.
Diversification Opportunities for Daiyang Metal and Hwashin Precision
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Daiyang and Hwashin is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Daiyang Metal Co and Hwashin Precision Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hwashin Precision 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 Hwashin Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hwashin Precision has no effect on the direction of Daiyang Metal i.e., Daiyang Metal and Hwashin Precision go up and down completely randomly.
Pair Corralation between Daiyang Metal and Hwashin Precision
Assuming the 90 days trading horizon Daiyang Metal Co is expected to under-perform the Hwashin Precision. But the stock apears to be less risky and, when comparing its historical volatility, Daiyang Metal Co is 1.21 times less risky than Hwashin Precision. The stock trades about -0.11 of its potential returns per unit of risk. The Hwashin Precision Engineering is currently generating about 0.61 of returns per unit of risk over similar time horizon. If you would invest 123,941 in Hwashin Precision Engineering on October 22, 2024 and sell it today you would earn a total of 57,559 from holding Hwashin Precision Engineering or generate 46.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daiyang Metal Co vs. Hwashin Precision Engineering
Performance |
| Timeline |
| Daiyang Metal |
| Hwashin Precision |
Daiyang Metal and Hwashin Precision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daiyang Metal and Hwashin Precision
The main advantage of trading using opposite Daiyang Metal and Hwashin Precision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daiyang Metal position performs unexpectedly, Hwashin Precision 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 Hwashin Precision will offset losses from the drop in Hwashin Precision's long position.| Daiyang Metal vs. Dgb Financial | Daiyang Metal vs. GS Retail Co | Daiyang Metal vs. Jinro Distillers Co | Daiyang Metal vs. Hana Financial |
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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