Correlation Between Daekyung Machinery and Hana Materials
Can any of the company-specific risk be diversified away by investing in both Daekyung Machinery and Hana Materials 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 Hana Materials 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 Hana Materials, you can compare the effects of market volatilities on Daekyung Machinery and Hana Materials 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 Hana Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daekyung Machinery and Hana Materials.
Diversification Opportunities for Daekyung Machinery and Hana Materials
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Daekyung and Hana is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Daekyung Machinery Engineering and Hana Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hana Materials 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 Hana Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hana Materials has no effect on the direction of Daekyung Machinery i.e., Daekyung Machinery and Hana Materials go up and down completely randomly.
Pair Corralation between Daekyung Machinery and Hana Materials
Assuming the 90 days trading horizon Daekyung Machinery Engineering is expected to generate 1.33 times more return on investment than Hana Materials. However, Daekyung Machinery is 1.33 times more volatile than Hana Materials. It trades about 0.37 of its potential returns per unit of risk. Hana Materials is currently generating about -0.38 per unit of risk. If you would invest 40,800 in Daekyung Machinery Engineering on August 27, 2024 and sell it today you would earn a total of 11,700 from holding Daekyung Machinery Engineering or generate 28.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daekyung Machinery Engineering vs. Hana Materials
Performance |
| Timeline |
| Daekyung Machinery |
| Hana Materials |
Daekyung Machinery and Hana Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daekyung Machinery and Hana Materials
The main advantage of trading using opposite Daekyung Machinery and Hana Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daekyung Machinery position performs unexpectedly, Hana Materials 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 Hana Materials will offset losses from the drop in Hana Materials' long position.| Daekyung Machinery vs. SKONEC Entertainment Co | Daekyung Machinery vs. Tamul Multimedia Co | Daekyung Machinery vs. Heungkuk Metaltech CoLtd | Daekyung Machinery vs. Digital Multimedia Technology |
| Hana Materials vs. SK Hynix | Hana Materials vs. People Technology | Hana Materials vs. SIMMTECH Co | Hana Materials vs. Haesung DS 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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