Correlation Between Semyung Electric and Daeduck Electronics

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Can any of the company-specific risk be diversified away by investing in both Semyung Electric and Daeduck Electronics 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 Semyung Electric and Daeduck Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Semyung Electric Machinery and Daeduck Electronics Co, you can compare the effects of market volatilities on Semyung Electric and Daeduck Electronics 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 Semyung Electric with a short position of Daeduck Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Semyung Electric and Daeduck Electronics.

Diversification Opportunities for Semyung Electric and Daeduck Electronics

-0.72
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Semyung and Daeduck is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Semyung Electric Machinery and Daeduck Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daeduck Electronics and Semyung 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 Semyung Electric Machinery are associated (or correlated) with Daeduck Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daeduck Electronics has no effect on the direction of Semyung Electric i.e., Semyung Electric and Daeduck Electronics go up and down completely randomly.

Pair Corralation between Semyung Electric and Daeduck Electronics

Assuming the 90 days trading horizon Semyung Electric Machinery is expected to generate 3.31 times more return on investment than Daeduck Electronics. However, Semyung Electric is 3.31 times more volatile than Daeduck Electronics Co. It trades about 0.35 of its potential returns per unit of risk. Daeduck Electronics Co is currently generating about 0.26 per unit of risk. If you would invest  410,682  in Semyung Electric Machinery on October 11, 2024 and sell it today you would earn a total of  81,818  from holding Semyung Electric Machinery or generate 19.92% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Semyung Electric Machinery  vs.  Daeduck Electronics Co

 Performance 
       Timeline  
Semyung Electric Mac 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Semyung Electric Machinery has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.
Daeduck Electronics 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Daeduck Electronics Co are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Daeduck Electronics may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Semyung Electric and Daeduck Electronics Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Semyung Electric and Daeduck Electronics

The main advantage of trading using opposite Semyung Electric and Daeduck Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Semyung Electric position performs unexpectedly, Daeduck Electronics 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 Daeduck Electronics will offset losses from the drop in Daeduck Electronics' long position.
The idea behind Semyung Electric Machinery and Daeduck Electronics Co 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.
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.

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