Correlation Between Daou Data and UJU Electronics
Can any of the company-specific risk be diversified away by investing in both Daou Data and UJU Electronics 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 UJU Electronics 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 UJU Electronics Co, you can compare the effects of market volatilities on Daou Data and UJU Electronics 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 UJU Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daou Data and UJU Electronics.
Diversification Opportunities for Daou Data and UJU Electronics
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Daou and UJU is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Daou Data Corp and UJU Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UJU Electronics 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 UJU Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UJU Electronics has no effect on the direction of Daou Data i.e., Daou Data and UJU Electronics go up and down completely randomly.
Pair Corralation between Daou Data and UJU Electronics
Assuming the 90 days trading horizon Daou Data Corp is expected to generate 0.65 times more return on investment than UJU Electronics. However, Daou Data Corp is 1.54 times less risky than UJU Electronics. It trades about -0.03 of its potential returns per unit of risk. UJU Electronics Co is currently generating about -0.05 per unit of risk. If you would invest 1,175,000 in Daou Data Corp on September 1, 2024 and sell it today you would lose (94,000) from holding Daou Data Corp or give up 8.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daou Data Corp vs. UJU Electronics Co
Performance |
| Timeline |
| Daou Data Corp |
| UJU Electronics |
Daou Data and UJU Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daou Data and UJU Electronics
The main advantage of trading using opposite Daou Data and UJU Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daou Data position performs unexpectedly, UJU Electronics 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 UJU Electronics will offset losses from the drop in UJU Electronics' long position.| Daou Data vs. Dongjin Semichem Co | Daou Data vs. AhnLab Inc | Daou Data vs. Posco ICT | Daou Data vs. CJ ENM |
| UJU Electronics vs. Dongsin Engineering Construction | UJU Electronics vs. Doosan Fuel Cell | UJU Electronics vs. Daishin Balance 1 | UJU Electronics vs. Total Soft Bank |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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