Correlation Between Daedong Metals and Sewoon Medical
Can any of the company-specific risk be diversified away by investing in both Daedong Metals and Sewoon Medical 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 Sewoon Medical 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 Sewoon Medical Co, you can compare the effects of market volatilities on Daedong Metals and Sewoon Medical 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 Sewoon Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daedong Metals and Sewoon Medical.
Diversification Opportunities for Daedong Metals and Sewoon Medical
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Daedong and Sewoon is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Daedong Metals Co and Sewoon Medical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sewoon Medical 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 Sewoon Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sewoon Medical has no effect on the direction of Daedong Metals i.e., Daedong Metals and Sewoon Medical go up and down completely randomly.
Pair Corralation between Daedong Metals and Sewoon Medical
Assuming the 90 days trading horizon Daedong Metals Co is expected to generate 4.47 times more return on investment than Sewoon Medical. However, Daedong Metals is 4.47 times more volatile than Sewoon Medical Co. It trades about 0.2 of its potential returns per unit of risk. Sewoon Medical Co is currently generating about -0.13 per unit of risk. If you would invest 643,000 in Daedong Metals Co on August 28, 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. Sewoon Medical Co
Performance |
| Timeline |
| Daedong Metals |
| Sewoon Medical |
Daedong Metals and Sewoon Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daedong Metals and Sewoon Medical
The main advantage of trading using opposite Daedong Metals and Sewoon Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daedong Metals position performs unexpectedly, Sewoon Medical 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 Sewoon Medical will offset losses from the drop in Sewoon Medical'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 |
| Sewoon Medical vs. Medy Tox | Sewoon Medical vs. Busan Industrial Co | Sewoon Medical vs. Busan Ind | Sewoon Medical vs. Mirae Asset Daewoo |
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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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