Correlation Between Choil Aluminum and Daejoo
Can any of the company-specific risk be diversified away by investing in both Choil Aluminum and Daejoo 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 Choil Aluminum and Daejoo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Choil Aluminum and Daejoo Inc, you can compare the effects of market volatilities on Choil Aluminum and Daejoo 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 Choil Aluminum with a short position of Daejoo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Choil Aluminum and Daejoo.
Diversification Opportunities for Choil Aluminum and Daejoo
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Choil and Daejoo is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Choil Aluminum and Daejoo Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daejoo Inc and Choil Aluminum 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 Choil Aluminum are associated (or correlated) with Daejoo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daejoo Inc has no effect on the direction of Choil Aluminum i.e., Choil Aluminum and Daejoo go up and down completely randomly.
Pair Corralation between Choil Aluminum and Daejoo
Assuming the 90 days trading horizon Choil Aluminum is expected to generate 1.25 times less return on investment than Daejoo. But when comparing it to its historical volatility, Choil Aluminum is 1.53 times less risky than Daejoo. It trades about 0.23 of its potential returns per unit of risk. Daejoo Inc is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 144,900 in Daejoo Inc on November 3, 2024 and sell it today you would earn a total of 8,100 from holding Daejoo Inc or generate 5.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Choil Aluminum vs. Daejoo Inc
Performance |
| Timeline |
| Choil Aluminum |
| Daejoo Inc |
Choil Aluminum and Daejoo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Choil Aluminum and Daejoo
The main advantage of trading using opposite Choil Aluminum and Daejoo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Choil Aluminum position performs unexpectedly, Daejoo 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 will offset losses from the drop in Daejoo's long position.| Choil Aluminum vs. Korea Investment Holdings | Choil Aluminum vs. Leaders Technology Investment | Choil Aluminum vs. Coloray International Investment | Choil Aluminum vs. SV Investment |
| Daejoo vs. Lotte Data Communication | Daejoo vs. Next Entertainment World | Daejoo vs. Nable Communications | Daejoo vs. Tamul Multimedia 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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