Correlation Between Daedong Metals and Jahwa Electron
Can any of the company-specific risk be diversified away by investing in both Daedong Metals and Jahwa Electron 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 Jahwa Electron 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 Jahwa Electron, you can compare the effects of market volatilities on Daedong Metals and Jahwa Electron 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 Jahwa Electron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daedong Metals and Jahwa Electron.
Diversification Opportunities for Daedong Metals and Jahwa Electron
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Daedong and Jahwa is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Daedong Metals Co and Jahwa Electron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jahwa Electron 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 Jahwa Electron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jahwa Electron has no effect on the direction of Daedong Metals i.e., Daedong Metals and Jahwa Electron go up and down completely randomly.
Pair Corralation between Daedong Metals and Jahwa Electron
Assuming the 90 days trading horizon Daedong Metals Co is expected to generate 2.1 times more return on investment than Jahwa Electron. However, Daedong Metals is 2.1 times more volatile than Jahwa Electron. It trades about 0.2 of its potential returns per unit of risk. Jahwa Electron is currently generating about -0.17 per unit of risk. If you would invest 643,000 in Daedong Metals Co on August 29, 2024 and sell it today you would earn a total of 214,000 from holding Daedong Metals Co or generate 33.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daedong Metals Co vs. Jahwa Electron
Performance |
| Timeline |
| Daedong Metals |
| Jahwa Electron |
Daedong Metals and Jahwa Electron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daedong Metals and Jahwa Electron
The main advantage of trading using opposite Daedong Metals and Jahwa Electron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daedong Metals position performs unexpectedly, Jahwa Electron 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 Jahwa Electron will offset losses from the drop in Jahwa Electron's long position.| Daedong Metals vs. Eugene Technology CoLtd | Daedong Metals vs. Daou Technology | Daedong Metals vs. ABCO Electronics Co | Daedong Metals vs. Samwha Electronics Co |
| Jahwa Electron vs. Daou Data Corp | Jahwa Electron vs. Busan Industrial Co | Jahwa Electron vs. Busan Ind | Jahwa Electron 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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