Correlation Between Daihan Pharmaceutical and Korean Drug
Can any of the company-specific risk be diversified away by investing in both Daihan Pharmaceutical and Korean Drug 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 Daihan Pharmaceutical and Korean Drug into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daihan Pharmaceutical CoLtd and Korean Drug Co, you can compare the effects of market volatilities on Daihan Pharmaceutical and Korean Drug 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 Daihan Pharmaceutical with a short position of Korean Drug. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daihan Pharmaceutical and Korean Drug.
Diversification Opportunities for Daihan Pharmaceutical and Korean Drug
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Daihan and Korean is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Daihan Pharmaceutical CoLtd and Korean Drug Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korean Drug and Daihan Pharmaceutical 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 Daihan Pharmaceutical CoLtd are associated (or correlated) with Korean Drug. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korean Drug has no effect on the direction of Daihan Pharmaceutical i.e., Daihan Pharmaceutical and Korean Drug go up and down completely randomly.
Pair Corralation between Daihan Pharmaceutical and Korean Drug
Assuming the 90 days trading horizon Daihan Pharmaceutical CoLtd is expected to under-perform the Korean Drug. But the stock apears to be less risky and, when comparing its historical volatility, Daihan Pharmaceutical CoLtd is 2.3 times less risky than Korean Drug. The stock trades about -0.02 of its potential returns per unit of risk. The Korean Drug Co is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 465,000 in Korean Drug Co on November 3, 2024 and sell it today you would earn a total of 13,500 from holding Korean Drug Co or generate 2.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daihan Pharmaceutical CoLtd vs. Korean Drug Co
Performance |
| Timeline |
| Daihan Pharmaceutical |
| Korean Drug |
Daihan Pharmaceutical and Korean Drug Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daihan Pharmaceutical and Korean Drug
The main advantage of trading using opposite Daihan Pharmaceutical and Korean Drug positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daihan Pharmaceutical position performs unexpectedly, Korean Drug 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 Korean Drug will offset losses from the drop in Korean Drug's long position.The idea behind Daihan Pharmaceutical CoLtd and Korean Drug Co 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.
| Korean Drug vs. Samsung Life Insurance | Korean Drug vs. Samlip General Foods | Korean Drug vs. Settlebank | Korean Drug vs. Hana Financial |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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