Correlation Between Iljin Materials and Daekyung Machinery
Can any of the company-specific risk be diversified away by investing in both Iljin Materials and Daekyung Machinery 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 Iljin Materials and Daekyung Machinery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iljin Materials Co and Daekyung Machinery Engineering, you can compare the effects of market volatilities on Iljin Materials and Daekyung Machinery 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 Iljin Materials with a short position of Daekyung Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iljin Materials and Daekyung Machinery.
Diversification Opportunities for Iljin Materials and Daekyung Machinery
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Iljin and Daekyung is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Iljin Materials Co and Daekyung Machinery Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daekyung Machinery and Iljin Materials 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 Iljin Materials Co are associated (or correlated) with Daekyung Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daekyung Machinery has no effect on the direction of Iljin Materials i.e., Iljin Materials and Daekyung Machinery go up and down completely randomly.
Pair Corralation between Iljin Materials and Daekyung Machinery
Assuming the 90 days trading horizon Iljin Materials Co is expected to under-perform the Daekyung Machinery. In addition to that, Iljin Materials is 1.03 times more volatile than Daekyung Machinery Engineering. It trades about -0.22 of its total potential returns per unit of risk. Daekyung Machinery Engineering is currently generating about 0.08 per unit of volatility. If you would invest 45,400 in Daekyung Machinery Engineering on August 31, 2024 and sell it today you would earn a total of 6,100 from holding Daekyung Machinery Engineering or generate 13.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.28% |
| Values | Daily Returns |
Iljin Materials Co vs. Daekyung Machinery Engineering
Performance |
| Timeline |
| Iljin Materials |
| Daekyung Machinery |
Iljin Materials and Daekyung Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iljin Materials and Daekyung Machinery
The main advantage of trading using opposite Iljin Materials and Daekyung Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iljin Materials position performs unexpectedly, Daekyung Machinery 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 Daekyung Machinery will offset losses from the drop in Daekyung Machinery's long position.| Iljin Materials vs. Samsung Electronics Co | Iljin Materials vs. Samsung Electronics Co | Iljin Materials vs. LG Energy Solution | Iljin Materials vs. SK Hynix |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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