Correlation Between Korea Information and Daou Data
Can any of the company-specific risk be diversified away by investing in both Korea Information 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 Korea Information and Daou Data into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Information Engineering and Daou Data Corp, you can compare the effects of market volatilities on Korea Information 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 Korea Information with a short position of Daou Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Information and Daou Data.
Diversification Opportunities for Korea Information and Daou Data
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Korea and Daou is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Korea Information Engineering 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 Korea Information 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 Korea Information Engineering 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 Korea Information i.e., Korea Information and Daou Data go up and down completely randomly.
Pair Corralation between Korea Information and Daou Data
Assuming the 90 days trading horizon Korea Information Engineering is expected to generate 0.92 times more return on investment than Daou Data. However, Korea Information Engineering is 1.09 times less risky than Daou Data. It trades about -0.02 of its potential returns per unit of risk. Daou Data Corp is currently generating about -0.04 per unit of risk. If you would invest 356,000 in Korea Information Engineering on September 3, 2024 and sell it today you would lose (121,500) from holding Korea Information Engineering or give up 34.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Information Engineering vs. Daou Data Corp
Performance |
| Timeline |
| Korea Information |
| Daou Data Corp |
Korea Information and Daou Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Information and Daou Data
The main advantage of trading using opposite Korea Information and Daou Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Information 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.| Korea Information vs. Dongsin Engineering Construction | Korea Information vs. Doosan Fuel Cell | Korea Information vs. Daishin Balance 1 | Korea Information vs. Total Soft Bank |
| Daou Data vs. Dongjin Semichem Co | Daou Data vs. AhnLab Inc | Daou Data vs. Posco ICT | Daou Data vs. CJ ENM |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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