Correlation Between Daekyung Machinery and Posco Chemical
Can any of the company-specific risk be diversified away by investing in both Daekyung Machinery and Posco Chemical 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 Daekyung Machinery and Posco Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daekyung Machinery Engineering and Posco Chemical Co, you can compare the effects of market volatilities on Daekyung Machinery and Posco Chemical 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 Daekyung Machinery with a short position of Posco Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daekyung Machinery and Posco Chemical.
Diversification Opportunities for Daekyung Machinery and Posco Chemical
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Daekyung and Posco is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Daekyung Machinery Engineering and Posco Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Posco Chemical and Daekyung Machinery 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 Daekyung Machinery Engineering are associated (or correlated) with Posco Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Posco Chemical has no effect on the direction of Daekyung Machinery i.e., Daekyung Machinery and Posco Chemical go up and down completely randomly.
Pair Corralation between Daekyung Machinery and Posco Chemical
Assuming the 90 days trading horizon Daekyung Machinery Engineering is expected to generate 1.48 times more return on investment than Posco Chemical. However, Daekyung Machinery is 1.48 times more volatile than Posco Chemical Co. It trades about -0.01 of its potential returns per unit of risk. Posco Chemical Co is currently generating about -0.06 per unit of risk. If you would invest 78,200 in Daekyung Machinery Engineering on September 3, 2024 and sell it today you would lose (26,700) from holding Daekyung Machinery Engineering or give up 34.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.74% |
| Values | Daily Returns |
Daekyung Machinery Engineering vs. Posco Chemical Co
Performance |
| Timeline |
| Daekyung Machinery |
| Posco Chemical |
Daekyung Machinery and Posco Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daekyung Machinery and Posco Chemical
The main advantage of trading using opposite Daekyung Machinery and Posco Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daekyung Machinery position performs unexpectedly, Posco Chemical 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 Posco Chemical will offset losses from the drop in Posco Chemical's long position.| Daekyung Machinery vs. Haesung Industrial Co | Daekyung Machinery vs. Polaris Office Corp | Daekyung Machinery vs. Wireless Power Amplifier | Daekyung Machinery vs. Cheryong Industrial CoLtd |
| Posco Chemical vs. Lotte Chilsung Beverage | Posco Chemical vs. SCI Information Service | Posco Chemical vs. Handok Clean Tech | Posco Chemical vs. Samyang Foods 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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