Correlation Between Keyang Electric and Daejung Chemicals
Can any of the company-specific risk be diversified away by investing in both Keyang Electric 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 Keyang Electric and Daejung Chemicals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Keyang Electric Machinery and Daejung Chemicals Metals, you can compare the effects of market volatilities on Keyang Electric 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 Keyang Electric with a short position of Daejung Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Keyang Electric and Daejung Chemicals.
Diversification Opportunities for Keyang Electric and Daejung Chemicals
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Keyang and Daejung is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Keyang Electric Machinery 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 Keyang Electric 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 Keyang Electric Machinery 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 Keyang Electric i.e., Keyang Electric and Daejung Chemicals go up and down completely randomly.
Pair Corralation between Keyang Electric and Daejung Chemicals
Assuming the 90 days trading horizon Keyang Electric Machinery is expected to generate 1.61 times more return on investment than Daejung Chemicals. However, Keyang Electric is 1.61 times more volatile than Daejung Chemicals Metals. It trades about 0.2 of its potential returns per unit of risk. Daejung Chemicals Metals is currently generating about 0.08 per unit of risk. If you would invest 326,000 in Keyang Electric Machinery on October 17, 2024 and sell it today you would earn a total of 83,000 from holding Keyang Electric Machinery or generate 25.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Keyang Electric Machinery vs. Daejung Chemicals Metals
Performance |
| Timeline |
| Keyang Electric Machinery |
| Daejung Chemicals Metals |
Keyang Electric and Daejung Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Keyang Electric and Daejung Chemicals
The main advantage of trading using opposite Keyang Electric and Daejung Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Keyang Electric 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.| Keyang Electric vs. INFINITT Healthcare Co | Keyang Electric vs. NICE Information Service | Keyang Electric vs. LG Household Healthcare | Keyang Electric vs. Korea Information Engineering |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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