Correlation Between Daou Data and TK Chemical
Can any of the company-specific risk be diversified away by investing in both Daou Data and TK Chemical 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 TK Chemical 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 TK Chemical, you can compare the effects of market volatilities on Daou Data and TK Chemical 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 TK Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daou Data and TK Chemical.
Diversification Opportunities for Daou Data and TK Chemical
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Daou and 104480 is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Daou Data Corp and TK Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TK Chemical 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 TK Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TK Chemical has no effect on the direction of Daou Data i.e., Daou Data and TK Chemical go up and down completely randomly.
Pair Corralation between Daou Data and TK Chemical
Assuming the 90 days trading horizon Daou Data Corp is expected to generate 0.9 times more return on investment than TK Chemical. However, Daou Data Corp is 1.11 times less risky than TK Chemical. It trades about -0.04 of its potential returns per unit of risk. TK Chemical is currently generating about -0.06 per unit of risk. If you would invest 1,330,000 in Daou Data Corp on September 3, 2024 and sell it today you would lose (249,000) from holding Daou Data Corp or give up 18.72% 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. TK Chemical
Performance |
| Timeline |
| Daou Data Corp |
| TK Chemical |
Daou Data and TK Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daou Data and TK Chemical
The main advantage of trading using opposite Daou Data and TK Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daou Data position performs unexpectedly, TK Chemical 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 TK Chemical will offset losses from the drop in TK Chemical's long position.| Daou Data vs. Dongjin Semichem Co | Daou Data vs. AhnLab Inc | Daou Data vs. Posco ICT | Daou Data vs. CJ ENM |
| TK Chemical vs. Nice Information Telecommunication | TK Chemical vs. Tway Air Co | TK Chemical vs. Digital Power Communications | TK Chemical vs. Kisan Telecom 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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