Correlation Between Daou Data and Korea Electronic
Can any of the company-specific risk be diversified away by investing in both Daou Data and Korea Electronic 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 Korea Electronic 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 Korea Electronic Certification, you can compare the effects of market volatilities on Daou Data and Korea Electronic 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 Korea Electronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daou Data and Korea Electronic.
Diversification Opportunities for Daou Data and Korea Electronic
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Daou and Korea is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Daou Data Corp and Korea Electronic Certification in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Electronic Cer 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 Korea Electronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Electronic Cer has no effect on the direction of Daou Data i.e., Daou Data and Korea Electronic go up and down completely randomly.
Pair Corralation between Daou Data and Korea Electronic
Assuming the 90 days trading horizon Daou Data Corp is expected to generate 0.96 times more return on investment than Korea Electronic. However, Daou Data Corp is 1.04 times less risky than Korea Electronic. It trades about 0.02 of its potential returns per unit of risk. Korea Electronic Certification is currently generating about -0.13 per unit of risk. If you would invest 1,073,000 in Daou Data Corp on September 2, 2024 and sell it today you would earn a total of 8,000 from holding Daou Data Corp or generate 0.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daou Data Corp vs. Korea Electronic Certification
Performance |
| Timeline |
| Daou Data Corp |
| Korea Electronic Cer |
Daou Data and Korea Electronic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daou Data and Korea Electronic
The main advantage of trading using opposite Daou Data and Korea Electronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daou Data position performs unexpectedly, Korea Electronic 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 Electronic will offset losses from the drop in Korea Electronic'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 |
| Korea Electronic vs. Korea New Network | Korea Electronic vs. ICD Co | Korea Electronic vs. DYPNF CoLtd | Korea Electronic vs. Busan Industrial Co |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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