Correlation Between Daedong Metals and Daewon Chemical
Can any of the company-specific risk be diversified away by investing in both Daedong Metals and Daewon Chemical 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 Daedong Metals and Daewon Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daedong Metals Co and Daewon Chemical Co, you can compare the effects of market volatilities on Daedong Metals and Daewon Chemical 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 Daedong Metals with a short position of Daewon Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daedong Metals and Daewon Chemical.
Diversification Opportunities for Daedong Metals and Daewon Chemical
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Daedong and Daewon is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Daedong Metals Co and Daewon Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daewon Chemical and Daedong Metals 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 Daedong Metals Co are associated (or correlated) with Daewon Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daewon Chemical has no effect on the direction of Daedong Metals i.e., Daedong Metals and Daewon Chemical go up and down completely randomly.
Pair Corralation between Daedong Metals and Daewon Chemical
Assuming the 90 days trading horizon Daedong Metals Co is expected to generate 1.09 times more return on investment than Daewon Chemical. However, Daedong Metals is 1.09 times more volatile than Daewon Chemical Co. It trades about 0.0 of its potential returns per unit of risk. Daewon Chemical Co is currently generating about -0.03 per unit of risk. If you would invest 938,756 in Daedong Metals Co on September 3, 2024 and sell it today you would lose (196,756) from holding Daedong Metals Co or give up 20.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daedong Metals Co vs. Daewon Chemical Co
Performance |
| Timeline |
| Daedong Metals |
| Daewon Chemical |
Daedong Metals and Daewon Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daedong Metals and Daewon Chemical
The main advantage of trading using opposite Daedong Metals and Daewon Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daedong Metals position performs unexpectedly, Daewon Chemical 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 Chemical will offset losses from the drop in Daewon Chemical's long position.| Daedong Metals vs. Ecocab Co | Daedong Metals vs. Daedong Gear Co | Daedong Metals vs. Hwashin Precision Engineering | Daedong Metals vs. YOUNGHWA TECH Co |
| Daewon Chemical vs. Daejoo Electronic Materials | Daewon Chemical vs. Phoenix Materials Co | Daewon Chemical vs. INNOX Advanced Materials | Daewon Chemical vs. Lotte Energy Materials |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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