Correlation Between Daewon Chemical and Digital Power
Can any of the company-specific risk be diversified away by investing in both Daewon Chemical and Digital Power 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 Daewon Chemical and Digital Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daewon Chemical Co and Digital Power Communications, you can compare the effects of market volatilities on Daewon Chemical and Digital Power 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 Daewon Chemical with a short position of Digital Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daewon Chemical and Digital Power.
Diversification Opportunities for Daewon Chemical and Digital Power
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Daewon and Digital is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Daewon Chemical Co and Digital Power Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital Power Commun and Daewon Chemical 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 Daewon Chemical Co are associated (or correlated) with Digital Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital Power Commun has no effect on the direction of Daewon Chemical i.e., Daewon Chemical and Digital Power go up and down completely randomly.
Pair Corralation between Daewon Chemical and Digital Power
Assuming the 90 days trading horizon Daewon Chemical Co is expected to under-perform the Digital Power. In addition to that, Daewon Chemical is 1.45 times more volatile than Digital Power Communications. It trades about -0.04 of its total potential returns per unit of risk. Digital Power Communications is currently generating about 0.04 per unit of volatility. If you would invest 571,089 in Digital Power Communications on October 28, 2024 and sell it today you would earn a total of 246,911 from holding Digital Power Communications or generate 43.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daewon Chemical Co vs. Digital Power Communications
Performance |
| Timeline |
| Daewon Chemical |
| Digital Power Commun |
Daewon Chemical and Digital Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daewon Chemical and Digital Power
The main advantage of trading using opposite Daewon Chemical and Digital Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daewon Chemical position performs unexpectedly, Digital Power 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 Digital Power will offset losses from the drop in Digital Power's long position.| Daewon Chemical vs. ABOV Semiconductor Co | Daewon Chemical vs. Daejung Chemicals Metals | Daewon Chemical vs. Sewoon Medical Co | Daewon Chemical vs. Moonbae Steel |
| Digital Power vs. KB Financial Group | Digital Power vs. Shinhan Financial Group | Digital Power vs. Hana Financial | Digital Power 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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