Correlation Between Iljin Display and Daesung Hi
Can any of the company-specific risk be diversified away by investing in both Iljin Display and Daesung Hi 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 Iljin Display and Daesung Hi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iljin Display and Daesung Hi Tech Co, you can compare the effects of market volatilities on Iljin Display and Daesung Hi 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 Iljin Display with a short position of Daesung Hi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iljin Display and Daesung Hi.
Diversification Opportunities for Iljin Display and Daesung Hi
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Iljin and Daesung is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Iljin Display and Daesung Hi Tech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daesung Hi Tech and Iljin Display 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 Iljin Display are associated (or correlated) with Daesung Hi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daesung Hi Tech has no effect on the direction of Iljin Display i.e., Iljin Display and Daesung Hi go up and down completely randomly.
Pair Corralation between Iljin Display and Daesung Hi
Assuming the 90 days trading horizon Iljin Display is expected to generate 0.69 times more return on investment than Daesung Hi. However, Iljin Display is 1.45 times less risky than Daesung Hi. It trades about -0.19 of its potential returns per unit of risk. Daesung Hi Tech Co is currently generating about -0.26 per unit of risk. If you would invest 89,900 in Iljin Display on September 1, 2024 and sell it today you would lose (4,000) from holding Iljin Display or give up 4.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Iljin Display vs. Daesung Hi Tech Co
Performance |
| Timeline |
| Iljin Display |
| Daesung Hi Tech |
Iljin Display and Daesung Hi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iljin Display and Daesung Hi
The main advantage of trading using opposite Iljin Display and Daesung Hi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iljin Display position performs unexpectedly, Daesung Hi 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 Daesung Hi will offset losses from the drop in Daesung Hi's long position.| Iljin Display vs. Automobile Pc | Iljin Display vs. Wonil Special Steel | Iljin Display vs. Korea Information Communications | Iljin Display vs. Hwangkum Steel Technology |
| Daesung Hi vs. Samsung Electronics Co | Daesung Hi vs. Samsung Electronics Co | Daesung Hi vs. LG Energy Solution | Daesung Hi vs. SK Hynix |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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