Correlation Between Daou Data and Seobu TD
Can any of the company-specific risk be diversified away by investing in both Daou Data and Seobu TD 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 Daou Data and Seobu TD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daou Data Corp and Seobu TD Co, you can compare the effects of market volatilities on Daou Data and Seobu TD 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 Daou Data with a short position of Seobu TD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daou Data and Seobu TD.
Diversification Opportunities for Daou Data and Seobu TD
Poor diversification
The 3 months correlation between Daou and Seobu is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Daou Data Corp and Seobu TD Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seobu TD and Daou Data 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 Daou Data Corp are associated (or correlated) with Seobu TD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seobu TD has no effect on the direction of Daou Data i.e., Daou Data and Seobu TD go up and down completely randomly.
Pair Corralation between Daou Data and Seobu TD
Assuming the 90 days trading horizon Daou Data Corp is expected to generate 1.16 times more return on investment than Seobu TD. However, Daou Data is 1.16 times more volatile than Seobu TD Co. It trades about -0.01 of its potential returns per unit of risk. Seobu TD Co is currently generating about -0.03 per unit of risk. If you would invest 1,192,788 in Daou Data Corp on September 2, 2024 and sell it today you would lose (111,788) from holding Daou Data Corp or give up 9.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daou Data Corp vs. Seobu TD Co
Performance |
| Timeline |
| Daou Data Corp |
| Seobu TD |
Daou Data and Seobu TD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daou Data and Seobu TD
The main advantage of trading using opposite Daou Data and Seobu TD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daou Data position performs unexpectedly, Seobu TD 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 Seobu TD will offset losses from the drop in Seobu TD's long position.| Daou Data vs. Samsung Electronics Co | Daou Data vs. Samsung Electronics Co | Daou Data vs. KB Financial Group | Daou Data vs. Shinhan Financial Group |
| Seobu TD vs. LG Display | Seobu TD vs. Hyundai Motor Co | Seobu TD vs. Hyundai Motor Co | Seobu TD vs. Adaptive Plasma Technology |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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