Correlation Between Daekyung Machinery and KEPCO Engineering
Can any of the company-specific risk be diversified away by investing in both Daekyung Machinery and KEPCO Engineering 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 KEPCO Engineering 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 KEPCO Engineering Construction, you can compare the effects of market volatilities on Daekyung Machinery and KEPCO Engineering 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 KEPCO Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daekyung Machinery and KEPCO Engineering.
Diversification Opportunities for Daekyung Machinery and KEPCO Engineering
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Daekyung and KEPCO is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Daekyung Machinery Engineering and KEPCO Engineering Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KEPCO Engineering 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 KEPCO Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KEPCO Engineering has no effect on the direction of Daekyung Machinery i.e., Daekyung Machinery and KEPCO Engineering go up and down completely randomly.
Pair Corralation between Daekyung Machinery and KEPCO Engineering
Assuming the 90 days trading horizon Daekyung Machinery Engineering is expected to under-perform the KEPCO Engineering. In addition to that, Daekyung Machinery is 1.97 times more volatile than KEPCO Engineering Construction. It trades about -0.01 of its total potential returns per unit of risk. KEPCO Engineering Construction is currently generating about 0.03 per unit of volatility. If you would invest 6,306,914 in KEPCO Engineering Construction on September 4, 2024 and sell it today you would earn a total of 543,086 from holding KEPCO Engineering Construction or generate 8.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.33% |
| Values | Daily Returns |
Daekyung Machinery Engineering vs. KEPCO Engineering Construction
Performance |
| Timeline |
| Daekyung Machinery |
| KEPCO Engineering |
Daekyung Machinery and KEPCO Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daekyung Machinery and KEPCO Engineering
The main advantage of trading using opposite Daekyung Machinery and KEPCO Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daekyung Machinery position performs unexpectedly, KEPCO Engineering 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 KEPCO Engineering will offset losses from the drop in KEPCO Engineering's long position.| Daekyung Machinery vs. AptaBio Therapeutics | Daekyung Machinery vs. Daewoo SBI SPAC | Daekyung Machinery vs. Dream Security co | Daekyung Machinery vs. Microfriend |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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