Correlation Between Daou Technology and CHEMTRONICSCOLtd
Can any of the company-specific risk be diversified away by investing in both Daou Technology and CHEMTRONICSCOLtd 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 CHEMTRONICSCOLtd into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daou Technology and CHEMTRONICSCOLtd, you can compare the effects of market volatilities on Daou Technology and CHEMTRONICSCOLtd 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 CHEMTRONICSCOLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daou Technology and CHEMTRONICSCOLtd.
Diversification Opportunities for Daou Technology and CHEMTRONICSCOLtd
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Daou and CHEMTRONICSCOLtd is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Daou Technology and CHEMTRONICSCOLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHEMTRONICSCOLtd 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 CHEMTRONICSCOLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHEMTRONICSCOLtd has no effect on the direction of Daou Technology i.e., Daou Technology and CHEMTRONICSCOLtd go up and down completely randomly.
Pair Corralation between Daou Technology and CHEMTRONICSCOLtd
Assuming the 90 days trading horizon Daou Technology is expected to generate 0.46 times more return on investment than CHEMTRONICSCOLtd. However, Daou Technology is 2.18 times less risky than CHEMTRONICSCOLtd. It trades about 0.04 of its potential returns per unit of risk. CHEMTRONICSCOLtd is currently generating about -0.11 per unit of risk. If you would invest 1,766,000 in Daou Technology on September 14, 2024 and sell it today you would earn a total of 19,000 from holding Daou Technology or generate 1.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daou Technology vs. CHEMTRONICSCOLtd
Performance |
| Timeline |
| Daou Technology |
| CHEMTRONICSCOLtd |
Daou Technology and CHEMTRONICSCOLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daou Technology and CHEMTRONICSCOLtd
The main advantage of trading using opposite Daou Technology and CHEMTRONICSCOLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daou Technology position performs unexpectedly, CHEMTRONICSCOLtd 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 CHEMTRONICSCOLtd will offset losses from the drop in CHEMTRONICSCOLtd's long position.| Daou Technology vs. Samsung Electronics Co | Daou Technology vs. Samsung Electronics Co | Daou Technology vs. SK Hynix | Daou Technology vs. POSCO Holdings |
| CHEMTRONICSCOLtd vs. CKH Food Health | CHEMTRONICSCOLtd vs. Foodnamoo | CHEMTRONICSCOLtd vs. Seoul Food Industrial | CHEMTRONICSCOLtd vs. Sung Bo Chemicals |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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