Correlation Between Daiyang Metal and MITECH CoLtd
Can any of the company-specific risk be diversified away by investing in both Daiyang Metal and MITECH 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 MITECH 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 MITECH CoLtd, you can compare the effects of market volatilities on Daiyang Metal and MITECH 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 MITECH CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daiyang Metal and MITECH CoLtd.
Diversification Opportunities for Daiyang Metal and MITECH CoLtd
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Daiyang and MITECH is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Daiyang Metal Co and MITECH CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MITECH 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 MITECH CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MITECH CoLtd has no effect on the direction of Daiyang Metal i.e., Daiyang Metal and MITECH CoLtd go up and down completely randomly.
Pair Corralation between Daiyang Metal and MITECH CoLtd
Assuming the 90 days trading horizon Daiyang Metal Co is expected to under-perform the MITECH CoLtd. In addition to that, Daiyang Metal is 1.54 times more volatile than MITECH CoLtd. It trades about -0.11 of its total potential returns per unit of risk. MITECH CoLtd is currently generating about -0.04 per unit of volatility. If you would invest 812,780 in MITECH CoLtd on October 14, 2024 and sell it today you would lose (11,780) from holding MITECH CoLtd or give up 1.45% 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. MITECH CoLtd
Performance |
| Timeline |
| Daiyang Metal |
| MITECH CoLtd |
Daiyang Metal and MITECH CoLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daiyang Metal and MITECH CoLtd
The main advantage of trading using opposite Daiyang Metal and MITECH CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daiyang Metal position performs unexpectedly, MITECH 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 MITECH CoLtd will offset losses from the drop in MITECH CoLtd's long position.| Daiyang Metal vs. DB Insurance Co | Daiyang Metal vs. Koryo Credit Information | Daiyang Metal vs. Hana Financial | Daiyang Metal vs. Incar Financial Service |
| MITECH CoLtd vs. Korean Reinsurance Co | MITECH CoLtd vs. Mgame Corp | MITECH CoLtd vs. System and Application | MITECH CoLtd vs. Daiyang 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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