Correlation Between Sejong Industrial and Daou Data
Can any of the company-specific risk be diversified away by investing in both Sejong Industrial and Daou Data 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 Sejong Industrial and Daou Data into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sejong Industrial and Daou Data Corp, you can compare the effects of market volatilities on Sejong Industrial and Daou Data 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 Sejong Industrial with a short position of Daou Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sejong Industrial and Daou Data.
Diversification Opportunities for Sejong Industrial and Daou Data
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sejong and Daou is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Sejong Industrial and Daou Data Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daou Data Corp and Sejong Industrial 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 Sejong Industrial are associated (or correlated) with Daou Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daou Data Corp has no effect on the direction of Sejong Industrial i.e., Sejong Industrial and Daou Data go up and down completely randomly.
Pair Corralation between Sejong Industrial and Daou Data
Assuming the 90 days trading horizon Sejong Industrial is expected to under-perform the Daou Data. In addition to that, Sejong Industrial is 1.37 times more volatile than Daou Data Corp. It trades about -0.2 of its total potential returns per unit of risk. Daou Data Corp is currently generating about -0.11 per unit of volatility. If you would invest 1,061,000 in Daou Data Corp on September 12, 2024 and sell it today you would lose (52,000) from holding Daou Data Corp or give up 4.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sejong Industrial vs. Daou Data Corp
Performance |
| Timeline |
| Sejong Industrial |
| Daou Data Corp |
Sejong Industrial and Daou Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sejong Industrial and Daou Data
The main advantage of trading using opposite Sejong Industrial and Daou Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sejong Industrial position performs unexpectedly, Daou Data 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 Daou Data will offset losses from the drop in Daou Data's long position.| Sejong Industrial vs. Daou Data Corp | Sejong Industrial vs. Solution Advanced Technology | Sejong Industrial vs. Busan Industrial Co | Sejong Industrial vs. Busan Ind |
| Daou Data vs. KB Financial Group | Daou Data vs. Shinhan Financial Group | Daou Data vs. Hana Financial | Daou Data vs. Woori Financial Group |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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