Correlation Between Korea Shipbuilding and DAEYANG ELECTRICCoLtd
Can any of the company-specific risk be diversified away by investing in both Korea Shipbuilding and DAEYANG ELECTRICCoLtd 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 Korea Shipbuilding and DAEYANG ELECTRICCoLtd into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Shipbuilding Offshore and DAEYANG ELECTRICCoLtd, you can compare the effects of market volatilities on Korea Shipbuilding and DAEYANG ELECTRICCoLtd 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 Korea Shipbuilding with a short position of DAEYANG ELECTRICCoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Shipbuilding and DAEYANG ELECTRICCoLtd.
Diversification Opportunities for Korea Shipbuilding and DAEYANG ELECTRICCoLtd
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Korea and DAEYANG is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Korea Shipbuilding Offshore and DAEYANG ELECTRICCoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DAEYANG ELECTRICCoLtd and Korea Shipbuilding 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 Korea Shipbuilding Offshore are associated (or correlated) with DAEYANG ELECTRICCoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DAEYANG ELECTRICCoLtd has no effect on the direction of Korea Shipbuilding i.e., Korea Shipbuilding and DAEYANG ELECTRICCoLtd go up and down completely randomly.
Pair Corralation between Korea Shipbuilding and DAEYANG ELECTRICCoLtd
Assuming the 90 days trading horizon Korea Shipbuilding Offshore is expected to generate 1.04 times more return on investment than DAEYANG ELECTRICCoLtd. However, Korea Shipbuilding is 1.04 times more volatile than DAEYANG ELECTRICCoLtd. It trades about 0.18 of its potential returns per unit of risk. DAEYANG ELECTRICCoLtd is currently generating about -0.04 per unit of risk. If you would invest 18,770,000 in Korea Shipbuilding Offshore on September 13, 2024 and sell it today you would earn a total of 2,330,000 from holding Korea Shipbuilding Offshore or generate 12.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Korea Shipbuilding Offshore vs. DAEYANG ELECTRICCoLtd
Performance |
| Timeline |
| Korea Shipbuilding |
| DAEYANG ELECTRICCoLtd |
Korea Shipbuilding and DAEYANG ELECTRICCoLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Shipbuilding and DAEYANG ELECTRICCoLtd
The main advantage of trading using opposite Korea Shipbuilding and DAEYANG ELECTRICCoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Shipbuilding position performs unexpectedly, DAEYANG ELECTRICCoLtd 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 DAEYANG ELECTRICCoLtd will offset losses from the drop in DAEYANG ELECTRICCoLtd's long position.| Korea Shipbuilding vs. Jeju Bank | Korea Shipbuilding vs. KB Financial Group | Korea Shipbuilding vs. KIWI Media Group | Korea Shipbuilding vs. DB Financial Investment |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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