Correlation Between Daewoo Electronic and Daesung Hi
Can any of the company-specific risk be diversified away by investing in both Daewoo Electronic and Daesung Hi 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 Daesung Hi 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 Daesung Hi Tech Co, you can compare the effects of market volatilities on Daewoo Electronic and Daesung Hi 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 Daesung Hi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daewoo Electronic and Daesung Hi.
Diversification Opportunities for Daewoo Electronic and Daesung Hi
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Daewoo and Daesung is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Daewoo Electronic Components and Daesung Hi Tech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daesung Hi Tech 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 Daesung Hi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daesung Hi Tech has no effect on the direction of Daewoo Electronic i.e., Daewoo Electronic and Daesung Hi go up and down completely randomly.
Pair Corralation between Daewoo Electronic and Daesung Hi
Assuming the 90 days trading horizon Daewoo Electronic Components is expected to generate 0.64 times more return on investment than Daesung Hi. However, Daewoo Electronic Components is 1.55 times less risky than Daesung Hi. It trades about -0.02 of its potential returns per unit of risk. Daesung Hi Tech Co is currently generating about -0.04 per unit of risk. If you would invest 148,000 in Daewoo Electronic Components on October 13, 2024 and sell it today you would lose (46,300) from holding Daewoo Electronic Components or give up 31.28% 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. Daesung Hi Tech Co
Performance |
| Timeline |
| Daewoo Electronic |
| Daesung Hi Tech |
Daewoo Electronic and Daesung Hi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daewoo Electronic and Daesung Hi
The main advantage of trading using opposite Daewoo Electronic and Daesung Hi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daewoo Electronic position performs unexpectedly, Daesung Hi 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 Daesung Hi will offset losses from the drop in Daesung Hi's long position.| Daewoo Electronic vs. Daesung Hi Tech Co | Daewoo Electronic vs. LG Display Co | Daewoo Electronic vs. Lotte Data Communication | Daewoo Electronic vs. Digital Power Communications |
| Daesung Hi vs. DONGKUK TED METAL | Daesung Hi vs. Eugene Technology CoLtd | Daesung Hi vs. Seers Technology | Daesung Hi vs. iNtRON Biotechnology |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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