Correlation Between Daishin Information and Daehan Steel
Can any of the company-specific risk be diversified away by investing in both Daishin Information and Daehan Steel 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 Daishin Information and Daehan Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daishin Information Communications and Daehan Steel, you can compare the effects of market volatilities on Daishin Information and Daehan Steel 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 Daishin Information with a short position of Daehan Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daishin Information and Daehan Steel.
Diversification Opportunities for Daishin Information and Daehan Steel
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Daishin and Daehan is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Daishin Information Communicat and Daehan Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daehan Steel and Daishin Information 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 Daishin Information Communications are associated (or correlated) with Daehan Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daehan Steel has no effect on the direction of Daishin Information i.e., Daishin Information and Daehan Steel go up and down completely randomly.
Pair Corralation between Daishin Information and Daehan Steel
Assuming the 90 days trading horizon Daishin Information is expected to generate 11.89 times less return on investment than Daehan Steel. In addition to that, Daishin Information is 1.19 times more volatile than Daehan Steel. It trades about 0.0 of its total potential returns per unit of risk. Daehan Steel is currently generating about 0.02 per unit of volatility. If you would invest 1,370,345 in Daehan Steel on November 9, 2024 and sell it today you would earn a total of 190,655 from holding Daehan Steel or generate 13.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daishin Information Communicat vs. Daehan Steel
Performance |
| Timeline |
| Daishin Information |
| Daehan Steel |
Daishin Information and Daehan Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daishin Information and Daehan Steel
The main advantage of trading using opposite Daishin Information and Daehan Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daishin Information position performs unexpectedly, Daehan Steel 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 Daehan Steel will offset losses from the drop in Daehan Steel's long position.The idea behind Daishin Information Communications and Daehan Steel pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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