Correlation Between Daihan Pharmaceutical and Aminologics CoLtd
Can any of the company-specific risk be diversified away by investing in both Daihan Pharmaceutical and Aminologics 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 Daihan Pharmaceutical and Aminologics CoLtd 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 Aminologics CoLtd, you can compare the effects of market volatilities on Daihan Pharmaceutical and Aminologics 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 Daihan Pharmaceutical with a short position of Aminologics CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daihan Pharmaceutical and Aminologics CoLtd.
Diversification Opportunities for Daihan Pharmaceutical and Aminologics CoLtd
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Daihan and Aminologics is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Daihan Pharmaceutical CoLtd and Aminologics CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aminologics CoLtd 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 Aminologics CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aminologics CoLtd has no effect on the direction of Daihan Pharmaceutical i.e., Daihan Pharmaceutical and Aminologics CoLtd go up and down completely randomly.
Pair Corralation between Daihan Pharmaceutical and Aminologics CoLtd
Assuming the 90 days trading horizon Daihan Pharmaceutical CoLtd is expected to generate 0.33 times more return on investment than Aminologics CoLtd. However, Daihan Pharmaceutical CoLtd is 3.03 times less risky than Aminologics CoLtd. It trades about 0.0 of its potential returns per unit of risk. Aminologics CoLtd is currently generating about -0.03 per unit of risk. If you would invest 2,676,279 in Daihan Pharmaceutical CoLtd on August 28, 2024 and sell it today you would lose (31,279) from holding Daihan Pharmaceutical CoLtd or give up 1.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daihan Pharmaceutical CoLtd vs. Aminologics CoLtd
Performance |
| Timeline |
| Daihan Pharmaceutical |
| Aminologics CoLtd |
Daihan Pharmaceutical and Aminologics CoLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daihan Pharmaceutical and Aminologics CoLtd
The main advantage of trading using opposite Daihan Pharmaceutical and Aminologics CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daihan Pharmaceutical position performs unexpectedly, Aminologics 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 Aminologics CoLtd will offset losses from the drop in Aminologics CoLtd's long position.| Daihan Pharmaceutical vs. Kolon Life Science | Daihan Pharmaceutical vs. Aminologics CoLtd | Daihan Pharmaceutical vs. Withuspharmaceutical CoLtd | Daihan Pharmaceutical vs. High Tech Pharm |
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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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