Correlation Between Iljin Display and Echomarketing CoLtd
Can any of the company-specific risk be diversified away by investing in both Iljin Display and Echomarketing CoLtd 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 Echomarketing CoLtd into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iljin Display and Echomarketing CoLtd, you can compare the effects of market volatilities on Iljin Display and Echomarketing CoLtd 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 Echomarketing CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iljin Display and Echomarketing CoLtd.
Diversification Opportunities for Iljin Display and Echomarketing CoLtd
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Iljin and Echomarketing is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Iljin Display and Echomarketing CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Echomarketing CoLtd 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 Echomarketing CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Echomarketing CoLtd has no effect on the direction of Iljin Display i.e., Iljin Display and Echomarketing CoLtd go up and down completely randomly.
Pair Corralation between Iljin Display and Echomarketing CoLtd
Assuming the 90 days trading horizon Iljin Display is expected to under-perform the Echomarketing CoLtd. But the stock apears to be less risky and, when comparing its historical volatility, Iljin Display is 4.29 times less risky than Echomarketing CoLtd. The stock trades about -0.27 of its potential returns per unit of risk. The Echomarketing CoLtd is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 1,049,000 in Echomarketing CoLtd on August 29, 2024 and sell it today you would lose (65,000) from holding Echomarketing CoLtd or give up 6.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Iljin Display vs. Echomarketing CoLtd
Performance |
| Timeline |
| Iljin Display |
| Echomarketing CoLtd |
Iljin Display and Echomarketing CoLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iljin Display and Echomarketing CoLtd
The main advantage of trading using opposite Iljin Display and Echomarketing CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iljin Display position performs unexpectedly, Echomarketing CoLtd 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 Echomarketing CoLtd will offset losses from the drop in Echomarketing CoLtd's long position.| Iljin Display vs. Kukdo Chemical Co | Iljin Display vs. SK Chemicals Co | Iljin Display vs. Youl Chon Chemical | Iljin Display vs. Korea Petro Chemical |
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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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