Correlation Between Choil Aluminum and Daewon Media
Can any of the company-specific risk be diversified away by investing in both Choil Aluminum and Daewon Media 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 Daewon Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Choil Aluminum and Daewon Media Co, you can compare the effects of market volatilities on Choil Aluminum and Daewon Media 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 Daewon Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Choil Aluminum and Daewon Media.
Diversification Opportunities for Choil Aluminum and Daewon Media
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Choil and Daewon is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Choil Aluminum and Daewon Media Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daewon Media 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 Daewon Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daewon Media has no effect on the direction of Choil Aluminum i.e., Choil Aluminum and Daewon Media go up and down completely randomly.
Pair Corralation between Choil Aluminum and Daewon Media
Assuming the 90 days trading horizon Choil Aluminum is expected to generate 1.53 times more return on investment than Daewon Media. However, Choil Aluminum is 1.53 times more volatile than Daewon Media Co. It trades about -0.01 of its potential returns per unit of risk. Daewon Media Co is currently generating about -0.05 per unit of risk. If you would invest 217,000 in Choil Aluminum on August 30, 2024 and sell it today you would lose (67,400) from holding Choil Aluminum or give up 31.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Choil Aluminum vs. Daewon Media Co
Performance |
| Timeline |
| Choil Aluminum |
| Daewon Media |
Choil Aluminum and Daewon Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Choil Aluminum and Daewon Media
The main advantage of trading using opposite Choil Aluminum and Daewon Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Choil Aluminum position performs unexpectedly, Daewon Media 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 Daewon Media will offset losses from the drop in Daewon Media's long position.| Choil Aluminum vs. Busan Industrial Co | Choil Aluminum vs. Busan Ind | Choil Aluminum vs. Shinhan WTI Futures | Choil Aluminum vs. Finebesteel |
| Daewon Media vs. Korea New Network | Daewon Media vs. Busan Industrial Co | Daewon Media vs. Busan Ind | Daewon Media vs. Shinhan WTI Futures |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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