Correlation Between Korea Alcohol and Daejoo Electronic
Can any of the company-specific risk be diversified away by investing in both Korea Alcohol and Daejoo Electronic 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 Korea Alcohol and Daejoo Electronic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Alcohol Industrial and Daejoo Electronic Materials, you can compare the effects of market volatilities on Korea Alcohol and Daejoo Electronic 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 Korea Alcohol with a short position of Daejoo Electronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Alcohol and Daejoo Electronic.
Diversification Opportunities for Korea Alcohol and Daejoo Electronic
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Korea and Daejoo is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Korea Alcohol Industrial and Daejoo Electronic Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daejoo Electronic and Korea Alcohol 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 Korea Alcohol Industrial are associated (or correlated) with Daejoo Electronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daejoo Electronic has no effect on the direction of Korea Alcohol i.e., Korea Alcohol and Daejoo Electronic go up and down completely randomly.
Pair Corralation between Korea Alcohol and Daejoo Electronic
Assuming the 90 days trading horizon Korea Alcohol Industrial is expected to generate 0.41 times more return on investment than Daejoo Electronic. However, Korea Alcohol Industrial is 2.46 times less risky than Daejoo Electronic. It trades about -0.13 of its potential returns per unit of risk. Daejoo Electronic Materials is currently generating about -0.26 per unit of risk. If you would invest 900,000 in Korea Alcohol Industrial on August 29, 2024 and sell it today you would lose (36,000) from holding Korea Alcohol Industrial or give up 4.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Alcohol Industrial vs. Daejoo Electronic Materials
Performance |
| Timeline |
| Korea Alcohol Industrial |
| Daejoo Electronic |
Korea Alcohol and Daejoo Electronic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Alcohol and Daejoo Electronic
The main advantage of trading using opposite Korea Alcohol and Daejoo Electronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Alcohol position performs unexpectedly, Daejoo Electronic 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 Daejoo Electronic will offset losses from the drop in Daejoo Electronic's long position.| Korea Alcohol vs. Sungchang Autotech Co | Korea Alcohol vs. RFTech Co | Korea Alcohol vs. INFINITT Healthcare Co | Korea Alcohol vs. POSCO M TECH Co |
| Daejoo Electronic vs. Korea Real Estate | Daejoo Electronic vs. Korea Ratings Co | Daejoo Electronic vs. IQuest Co | Daejoo Electronic vs. Wonbang Tech 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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