Correlation Between Daedong Metals and Jeju Semiconductor
Can any of the company-specific risk be diversified away by investing in both Daedong Metals and Jeju Semiconductor 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 Jeju Semiconductor 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 Jeju Semiconductor Corp, you can compare the effects of market volatilities on Daedong Metals and Jeju Semiconductor 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 Jeju Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daedong Metals and Jeju Semiconductor.
Diversification Opportunities for Daedong Metals and Jeju Semiconductor
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Daedong and Jeju is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Daedong Metals Co and Jeju Semiconductor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeju Semiconductor Corp 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 Jeju Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jeju Semiconductor Corp has no effect on the direction of Daedong Metals i.e., Daedong Metals and Jeju Semiconductor go up and down completely randomly.
Pair Corralation between Daedong Metals and Jeju Semiconductor
Assuming the 90 days trading horizon Daedong Metals Co is expected to generate 3.02 times more return on investment than Jeju Semiconductor. However, Daedong Metals is 3.02 times more volatile than Jeju Semiconductor Corp. It trades about 0.2 of its potential returns per unit of risk. Jeju Semiconductor Corp is currently generating about -0.47 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 | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daedong Metals Co vs. Jeju Semiconductor Corp
Performance |
| Timeline |
| Daedong Metals |
| Jeju Semiconductor Corp |
Daedong Metals and Jeju Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daedong Metals and Jeju Semiconductor
The main advantage of trading using opposite Daedong Metals and Jeju Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daedong Metals position performs unexpectedly, Jeju Semiconductor 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 Jeju Semiconductor will offset losses from the drop in Jeju Semiconductor's long position.| Daedong Metals vs. Cuckoo Electronics Co | Daedong Metals vs. Derkwoo Electronics Co | Daedong Metals vs. LG Electronics | Daedong Metals vs. Seoul Electronics Telecom |
| Jeju Semiconductor vs. Korea Real Estate | Jeju Semiconductor vs. Korea Ratings Co | Jeju Semiconductor vs. IQuest Co | Jeju Semiconductor vs. Wonbang Tech Co |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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