Correlation Between Cloud Air and Daejung Chemicals
Can any of the company-specific risk be diversified away by investing in both Cloud Air and Daejung Chemicals 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 Cloud Air and Daejung Chemicals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cloud Air CoLtd and Daejung Chemicals Metals, you can compare the effects of market volatilities on Cloud Air and Daejung Chemicals 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 Cloud Air with a short position of Daejung Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cloud Air and Daejung Chemicals.
Diversification Opportunities for Cloud Air and Daejung Chemicals
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cloud and Daejung is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Cloud Air CoLtd and Daejung Chemicals Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daejung Chemicals Metals and Cloud Air 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 Cloud Air CoLtd are associated (or correlated) with Daejung Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daejung Chemicals Metals has no effect on the direction of Cloud Air i.e., Cloud Air and Daejung Chemicals go up and down completely randomly.
Pair Corralation between Cloud Air and Daejung Chemicals
Assuming the 90 days trading horizon Cloud Air CoLtd is expected to under-perform the Daejung Chemicals. But the stock apears to be less risky and, when comparing its historical volatility, Cloud Air CoLtd is 1.13 times less risky than Daejung Chemicals. The stock trades about -0.04 of its potential returns per unit of risk. The Daejung Chemicals Metals is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 1,318,000 in Daejung Chemicals Metals on September 12, 2024 and sell it today you would lose (32,000) from holding Daejung Chemicals Metals or give up 2.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cloud Air CoLtd vs. Daejung Chemicals Metals
Performance |
| Timeline |
| Cloud Air CoLtd |
| Daejung Chemicals Metals |
Cloud Air and Daejung Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cloud Air and Daejung Chemicals
The main advantage of trading using opposite Cloud Air and Daejung Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cloud Air position performs unexpectedly, Daejung Chemicals 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 Daejung Chemicals will offset losses from the drop in Daejung Chemicals' long position.| Cloud Air vs. SK Hynix | Cloud Air vs. People Technology | Cloud Air vs. Hana Materials | Cloud Air vs. SIMMTECH Co |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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