Correlation Between Iljin Display and DAEDUCK ELECTRONICS
Can any of the company-specific risk be diversified away by investing in both Iljin Display and DAEDUCK ELECTRONICS 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 DAEDUCK ELECTRONICS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iljin Display and DAEDUCK ELECTRONICS CoLtd, you can compare the effects of market volatilities on Iljin Display and DAEDUCK ELECTRONICS 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 DAEDUCK ELECTRONICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iljin Display and DAEDUCK ELECTRONICS.
Diversification Opportunities for Iljin Display and DAEDUCK ELECTRONICS
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Iljin and DAEDUCK is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Iljin Display and DAEDUCK ELECTRONICS CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DAEDUCK ELECTRONICS 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 DAEDUCK ELECTRONICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DAEDUCK ELECTRONICS CoLtd has no effect on the direction of Iljin Display i.e., Iljin Display and DAEDUCK ELECTRONICS go up and down completely randomly.
Pair Corralation between Iljin Display and DAEDUCK ELECTRONICS
Assuming the 90 days trading horizon Iljin Display is expected to under-perform the DAEDUCK ELECTRONICS. But the stock apears to be less risky and, when comparing its historical volatility, Iljin Display is 1.4 times less risky than DAEDUCK ELECTRONICS. The stock trades about -0.29 of its potential returns per unit of risk. The DAEDUCK ELECTRONICS CoLtd is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 790,000 in DAEDUCK ELECTRONICS CoLtd on August 25, 2024 and sell it today you would earn a total of 19,000 from holding DAEDUCK ELECTRONICS CoLtd or generate 2.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Iljin Display vs. DAEDUCK ELECTRONICS CoLtd
Performance |
| Timeline |
| Iljin Display |
| DAEDUCK ELECTRONICS CoLtd |
Iljin Display and DAEDUCK ELECTRONICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iljin Display and DAEDUCK ELECTRONICS
The main advantage of trading using opposite Iljin Display and DAEDUCK ELECTRONICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iljin Display position performs unexpectedly, DAEDUCK ELECTRONICS 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 DAEDUCK ELECTRONICS will offset losses from the drop in DAEDUCK ELECTRONICS's long position.The idea behind Iljin Display and DAEDUCK ELECTRONICS CoLtd pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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