Correlation Between Daou Technology and SungMoon Electronics
Can any of the company-specific risk be diversified away by investing in both Daou Technology and SungMoon 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 Daou Technology and SungMoon Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daou Technology and SungMoon Electronics Co, you can compare the effects of market volatilities on Daou Technology and SungMoon 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 Daou Technology with a short position of SungMoon Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daou Technology and SungMoon Electronics.
Diversification Opportunities for Daou Technology and SungMoon Electronics
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Daou and SungMoon is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Daou Technology and SungMoon Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SungMoon Electronics and Daou Technology 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 Daou Technology are associated (or correlated) with SungMoon Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SungMoon Electronics has no effect on the direction of Daou Technology i.e., Daou Technology and SungMoon Electronics go up and down completely randomly.
Pair Corralation between Daou Technology and SungMoon Electronics
Assuming the 90 days trading horizon Daou Technology is expected to generate 12.03 times less return on investment than SungMoon Electronics. But when comparing it to its historical volatility, Daou Technology is 1.97 times less risky than SungMoon Electronics. It trades about 0.04 of its potential returns per unit of risk. SungMoon Electronics Co is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 107,300 in SungMoon Electronics Co on October 28, 2024 and sell it today you would earn a total of 9,000 from holding SungMoon Electronics Co or generate 8.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daou Technology vs. SungMoon Electronics Co
Performance |
| Timeline |
| Daou Technology |
| SungMoon Electronics |
Daou Technology and SungMoon Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daou Technology and SungMoon Electronics
The main advantage of trading using opposite Daou Technology and SungMoon Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daou Technology position performs unexpectedly, SungMoon 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 SungMoon Electronics will offset losses from the drop in SungMoon Electronics' long position.| Daou Technology vs. KB Financial Group | Daou Technology vs. Shinhan Financial Group | Daou Technology vs. Hana Financial | Daou Technology vs. Woori Financial Group |
| SungMoon Electronics vs. KB Financial Group | SungMoon Electronics vs. Shinhan Financial Group | SungMoon Electronics vs. Hana Financial | SungMoon Electronics vs. Woori Financial Group |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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