Correlation Between Korea Electronic and Daejoo Electronic
Can any of the company-specific risk be diversified away by investing in both Korea Electronic and Daejoo Electronic 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 Electronic and Daejoo Electronic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Electronic Certification and Daejoo Electronic Materials, you can compare the effects of market volatilities on Korea Electronic and Daejoo Electronic 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 Electronic with a short position of Daejoo Electronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Electronic and Daejoo Electronic.
Diversification Opportunities for Korea Electronic and Daejoo Electronic
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Korea and Daejoo is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Korea Electronic Certification and Daejoo Electronic Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daejoo Electronic and Korea Electronic 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 Electronic Certification are associated (or correlated) with Daejoo Electronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daejoo Electronic has no effect on the direction of Korea Electronic i.e., Korea Electronic and Daejoo Electronic go up and down completely randomly.
Pair Corralation between Korea Electronic and Daejoo Electronic
Assuming the 90 days trading horizon Korea Electronic is expected to generate 3.21 times less return on investment than Daejoo Electronic. But when comparing it to its historical volatility, Korea Electronic Certification is 3.01 times less risky than Daejoo Electronic. It trades about 0.3 of its potential returns per unit of risk. Daejoo Electronic Materials is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 7,710,000 in Daejoo Electronic Materials on October 20, 2024 and sell it today you would earn a total of 2,710,000 from holding Daejoo Electronic Materials or generate 35.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Electronic Certification vs. Daejoo Electronic Materials
Performance |
| Timeline |
| Korea Electronic Cer |
| Daejoo Electronic |
Korea Electronic and Daejoo Electronic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Electronic and Daejoo Electronic
The main advantage of trading using opposite Korea Electronic and Daejoo Electronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Electronic position performs unexpectedly, Daejoo Electronic 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 Daejoo Electronic will offset losses from the drop in Daejoo Electronic's long position.| Korea Electronic vs. Daou Data Corp | Korea Electronic vs. Busan Industrial Co | Korea Electronic vs. Busan Ind | Korea Electronic vs. Mirae Asset Daewoo |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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