Correlation Between Daiyang Metal and Derkwoo Electronics
Can any of the company-specific risk be diversified away by investing in both Daiyang Metal and Derkwoo 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 Derkwoo 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 Derkwoo Electronics Co, you can compare the effects of market volatilities on Daiyang Metal and Derkwoo 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 Derkwoo Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daiyang Metal and Derkwoo Electronics.
Diversification Opportunities for Daiyang Metal and Derkwoo Electronics
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Daiyang and Derkwoo is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Daiyang Metal Co and Derkwoo Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Derkwoo 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 Derkwoo Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Derkwoo Electronics has no effect on the direction of Daiyang Metal i.e., Daiyang Metal and Derkwoo Electronics go up and down completely randomly.
Pair Corralation between Daiyang Metal and Derkwoo Electronics
Assuming the 90 days trading horizon Daiyang Metal Co is expected to generate 0.79 times more return on investment than Derkwoo Electronics. However, Daiyang Metal Co is 1.27 times less risky than Derkwoo Electronics. It trades about 0.23 of its potential returns per unit of risk. Derkwoo Electronics Co is currently generating about -0.15 per unit of risk. If you would invest 149,400 in Daiyang Metal Co on September 25, 2024 and sell it today you would earn a total of 20,700 from holding Daiyang Metal Co or generate 13.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daiyang Metal Co vs. Derkwoo Electronics Co
Performance |
| Timeline |
| Daiyang Metal |
| Derkwoo Electronics |
Daiyang Metal and Derkwoo Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daiyang Metal and Derkwoo Electronics
The main advantage of trading using opposite Daiyang Metal and Derkwoo Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daiyang Metal position performs unexpectedly, Derkwoo 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 Derkwoo Electronics will offset losses from the drop in Derkwoo Electronics' long position.| Daiyang Metal vs. AptaBio Therapeutics | Daiyang Metal vs. Wonbang Tech Co | Daiyang Metal vs. Busan Industrial Co | Daiyang Metal vs. Busan Ind |
| Derkwoo Electronics vs. Youngsin Metal Industrial | Derkwoo Electronics vs. Haesung Industrial Co | Derkwoo Electronics vs. Daiyang Metal Co | Derkwoo Electronics vs. ITM Semiconductor 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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