Correlation Between Daewoo Electronic and Sangsin Energy
Can any of the company-specific risk be diversified away by investing in both Daewoo Electronic and Sangsin Energy 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 Daewoo Electronic and Sangsin Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daewoo Electronic Components and Sangsin Energy Display, you can compare the effects of market volatilities on Daewoo Electronic and Sangsin Energy 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 Daewoo Electronic with a short position of Sangsin Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daewoo Electronic and Sangsin Energy.
Diversification Opportunities for Daewoo Electronic and Sangsin Energy
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Daewoo and Sangsin is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Daewoo Electronic Components and Sangsin Energy Display in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sangsin Energy Display and Daewoo Electronic 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 Daewoo Electronic Components are associated (or correlated) with Sangsin Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sangsin Energy Display has no effect on the direction of Daewoo Electronic i.e., Daewoo Electronic and Sangsin Energy go up and down completely randomly.
Pair Corralation between Daewoo Electronic and Sangsin Energy
Assuming the 90 days trading horizon Daewoo Electronic Components is expected to generate 0.75 times more return on investment than Sangsin Energy. However, Daewoo Electronic Components is 1.34 times less risky than Sangsin Energy. It trades about -0.03 of its potential returns per unit of risk. Sangsin Energy Display is currently generating about -0.04 per unit of risk. If you would invest 157,400 in Daewoo Electronic Components on October 28, 2024 and sell it today you would lose (55,900) from holding Daewoo Electronic Components or give up 35.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daewoo Electronic Components vs. Sangsin Energy Display
Performance |
| Timeline |
| Daewoo Electronic |
| Sangsin Energy Display |
Daewoo Electronic and Sangsin Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daewoo Electronic and Sangsin Energy
The main advantage of trading using opposite Daewoo Electronic and Sangsin Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daewoo Electronic position performs unexpectedly, Sangsin Energy 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 Sangsin Energy will offset losses from the drop in Sangsin Energy's long position.| Daewoo Electronic vs. Sam Yang Foods | Daewoo Electronic vs. Coloray International Investment | Daewoo Electronic vs. Daol Investment Securities | Daewoo Electronic vs. TS Investment Corp |
| Sangsin Energy vs. Samsung Electronics Co | Sangsin Energy vs. Samsung Electronics Co | Sangsin Energy vs. KB Financial Group | Sangsin Energy vs. Shinhan Financial Group |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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