Correlation Between Daesung Private and Korea Computer
Can any of the company-specific risk be diversified away by investing in both Daesung Private and Korea Computer 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 Daesung Private and Korea Computer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daesung Private Equity and Korea Computer, you can compare the effects of market volatilities on Daesung Private and Korea Computer 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 Daesung Private with a short position of Korea Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daesung Private and Korea Computer.
Diversification Opportunities for Daesung Private and Korea Computer
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Daesung and Korea is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Daesung Private Equity and Korea Computer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Computer and Daesung Private 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 Daesung Private Equity are associated (or correlated) with Korea Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Computer has no effect on the direction of Daesung Private i.e., Daesung Private and Korea Computer go up and down completely randomly.
Pair Corralation between Daesung Private and Korea Computer
Assuming the 90 days trading horizon Daesung Private Equity is expected to generate 1.53 times more return on investment than Korea Computer. However, Daesung Private is 1.53 times more volatile than Korea Computer. It trades about 0.07 of its potential returns per unit of risk. Korea Computer is currently generating about 0.05 per unit of risk. If you would invest 146,100 in Daesung Private Equity on November 3, 2024 and sell it today you would earn a total of 43,900 from holding Daesung Private Equity or generate 30.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daesung Private Equity vs. Korea Computer
Performance |
| Timeline |
| Daesung Private Equity |
| Korea Computer |
Daesung Private and Korea Computer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daesung Private and Korea Computer
The main advantage of trading using opposite Daesung Private and Korea Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daesung Private position performs unexpectedly, Korea Computer 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 Korea Computer will offset losses from the drop in Korea Computer's long position.| Daesung Private vs. Tway Air Co | Daesung Private vs. LG Chemicals | Daesung Private vs. Cloud Air CoLtd | Daesung Private vs. Jeju Air Co |
| Korea Computer vs. Hankook Steel Co | Korea Computer vs. Fine Besteel Co | Korea Computer vs. INSUN Environmental New | Korea Computer vs. Wonil Special Steel |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity |