Correlation Between OCI and Daejoo Electronic
Can any of the company-specific risk be diversified away by investing in both OCI and Daejoo Electronic 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 OCI and Daejoo Electronic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OCI Co and Daejoo Electronic Materials, you can compare the effects of market volatilities on OCI and Daejoo Electronic 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 OCI with a short position of Daejoo Electronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of OCI and Daejoo Electronic.
Diversification Opportunities for OCI and Daejoo Electronic
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between OCI and Daejoo is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding OCI Co and Daejoo Electronic Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daejoo Electronic and OCI 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 OCI Co are associated (or correlated) with Daejoo Electronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daejoo Electronic has no effect on the direction of OCI i.e., OCI and Daejoo Electronic go up and down completely randomly.
Pair Corralation between OCI and Daejoo Electronic
Assuming the 90 days trading horizon OCI Co is expected to generate 0.69 times more return on investment than Daejoo Electronic. However, OCI Co is 1.44 times less risky than Daejoo Electronic. It trades about -0.27 of its potential returns per unit of risk. Daejoo Electronic Materials is currently generating about -0.27 per unit of risk. If you would invest 6,900,000 in OCI Co on September 2, 2024 and sell it today you would lose (950,000) from holding OCI Co or give up 13.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
OCI Co vs. Daejoo Electronic Materials
Performance |
| Timeline |
| OCI Co |
| Daejoo Electronic |
OCI and Daejoo Electronic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OCI and Daejoo Electronic
The main advantage of trading using opposite OCI and Daejoo Electronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OCI position performs unexpectedly, Daejoo Electronic 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 Daejoo Electronic will offset losses from the drop in Daejoo Electronic's long position.The idea behind OCI Co and Daejoo Electronic Materials pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Daejoo Electronic vs. Dongsin Engineering Construction | Daejoo Electronic vs. Doosan Fuel Cell | Daejoo Electronic vs. Daishin Balance 1 | Daejoo Electronic vs. Total Soft Bank |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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