Correlation Between Daol Investment and Keyang Electric
Can any of the company-specific risk be diversified away by investing in both Daol Investment and Keyang Electric 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 Daol Investment and Keyang Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daol Investment Securities and Keyang Electric Machinery, you can compare the effects of market volatilities on Daol Investment and Keyang Electric 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 Daol Investment with a short position of Keyang Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daol Investment and Keyang Electric.
Diversification Opportunities for Daol Investment and Keyang Electric
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Daol and Keyang is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Daol Investment Securities and Keyang Electric Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keyang Electric Machinery and Daol Investment 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 Daol Investment Securities are associated (or correlated) with Keyang Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keyang Electric Machinery has no effect on the direction of Daol Investment i.e., Daol Investment and Keyang Electric go up and down completely randomly.
Pair Corralation between Daol Investment and Keyang Electric
Assuming the 90 days trading horizon Daol Investment Securities is expected to under-perform the Keyang Electric. In addition to that, Daol Investment is 1.59 times more volatile than Keyang Electric Machinery. It trades about -0.27 of its total potential returns per unit of risk. Keyang Electric Machinery is currently generating about 0.13 per unit of volatility. If you would invest 359,500 in Keyang Electric Machinery on October 28, 2024 and sell it today you would earn a total of 20,000 from holding Keyang Electric Machinery or generate 5.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daol Investment Securities vs. Keyang Electric Machinery
Performance |
| Timeline |
| Daol Investment Secu |
| Keyang Electric Machinery |
Daol Investment and Keyang Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daol Investment and Keyang Electric
The main advantage of trading using opposite Daol Investment and Keyang Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daol Investment position performs unexpectedly, Keyang Electric 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 Keyang Electric will offset losses from the drop in Keyang Electric's long position.| Daol Investment vs. Samsung Electronics Co | Daol Investment vs. Samsung Electronics Co | Daol Investment vs. LG Energy Solution | Daol Investment vs. SK Hynix |
| Keyang Electric vs. Korea Petro Chemical | Keyang Electric vs. Youngchang Chemical Co | Keyang Electric vs. Namhae Chemical | Keyang Electric vs. Kyung In Synthetic Corp |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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