Correlation Between Playgram and Daejung Chemicals
Can any of the company-specific risk be diversified away by investing in both Playgram and Daejung Chemicals 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 Playgram and Daejung Chemicals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Playgram Co and Daejung Chemicals Metals, you can compare the effects of market volatilities on Playgram and Daejung Chemicals 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 Playgram with a short position of Daejung Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playgram and Daejung Chemicals.
Diversification Opportunities for Playgram and Daejung Chemicals
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Playgram and Daejung is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Playgram Co and Daejung Chemicals Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daejung Chemicals Metals and Playgram 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 Playgram Co are associated (or correlated) with Daejung Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daejung Chemicals Metals has no effect on the direction of Playgram i.e., Playgram and Daejung Chemicals go up and down completely randomly.
Pair Corralation between Playgram and Daejung Chemicals
Assuming the 90 days trading horizon Playgram Co is expected to generate 2.3 times more return on investment than Daejung Chemicals. However, Playgram is 2.3 times more volatile than Daejung Chemicals Metals. It trades about 0.1 of its potential returns per unit of risk. Daejung Chemicals Metals is currently generating about -0.05 per unit of risk. If you would invest 33,700 in Playgram Co on October 14, 2024 and sell it today you would earn a total of 7,300 from holding Playgram Co or generate 21.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Playgram Co vs. Daejung Chemicals Metals
Performance |
| Timeline |
| Playgram |
| Daejung Chemicals Metals |
Playgram and Daejung Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playgram and Daejung Chemicals
The main advantage of trading using opposite Playgram and Daejung Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playgram position performs unexpectedly, Daejung Chemicals 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 Daejung Chemicals will offset losses from the drop in Daejung Chemicals' long position.| Playgram vs. KT Submarine Telecom | Playgram vs. Digital Power Communications | Playgram vs. Seoyon Topmetal Co | Playgram vs. Eagon Industrial Co |
| Daejung Chemicals vs. Keyang Electric Machinery | Daejung Chemicals vs. Playgram Co | Daejung Chemicals vs. Seoam Machinery Industry | Daejung Chemicals vs. Woorim Machinery 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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