Correlation Between Iljin Materials and DIGITAL CHOSUN
Can any of the company-specific risk be diversified away by investing in both Iljin Materials and DIGITAL CHOSUN 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 DIGITAL CHOSUN 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 DIGITAL CHOSUN, you can compare the effects of market volatilities on Iljin Materials and DIGITAL CHOSUN 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 DIGITAL CHOSUN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iljin Materials and DIGITAL CHOSUN.
Diversification Opportunities for Iljin Materials and DIGITAL CHOSUN
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Iljin and DIGITAL is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Iljin Materials Co and DIGITAL CHOSUN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DIGITAL CHOSUN 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 DIGITAL CHOSUN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DIGITAL CHOSUN has no effect on the direction of Iljin Materials i.e., Iljin Materials and DIGITAL CHOSUN go up and down completely randomly.
Pair Corralation between Iljin Materials and DIGITAL CHOSUN
Assuming the 90 days trading horizon Iljin Materials Co is expected to under-perform the DIGITAL CHOSUN. In addition to that, Iljin Materials is 1.72 times more volatile than DIGITAL CHOSUN. It trades about -0.04 of its total potential returns per unit of risk. DIGITAL CHOSUN is currently generating about -0.01 per unit of volatility. If you would invest 174,000 in DIGITAL CHOSUN on September 23, 2024 and sell it today you would lose (2,900) from holding DIGITAL CHOSUN or give up 1.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Iljin Materials Co vs. DIGITAL CHOSUN
Performance |
| Timeline |
| Iljin Materials |
| DIGITAL CHOSUN |
Iljin Materials and DIGITAL CHOSUN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iljin Materials and DIGITAL CHOSUN
The main advantage of trading using opposite Iljin Materials and DIGITAL CHOSUN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iljin Materials position performs unexpectedly, DIGITAL CHOSUN 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 DIGITAL CHOSUN will offset losses from the drop in DIGITAL CHOSUN'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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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