Correlation Between Daewoo Shipbuilding and Heungkuk Metaltech
Can any of the company-specific risk be diversified away by investing in both Daewoo Shipbuilding and Heungkuk Metaltech 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 Daewoo Shipbuilding and Heungkuk Metaltech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daewoo Shipbuilding and Heungkuk Metaltech CoLtd, you can compare the effects of market volatilities on Daewoo Shipbuilding and Heungkuk Metaltech 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 Daewoo Shipbuilding with a short position of Heungkuk Metaltech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daewoo Shipbuilding and Heungkuk Metaltech.
Diversification Opportunities for Daewoo Shipbuilding and Heungkuk Metaltech
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Daewoo and Heungkuk is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Daewoo Shipbuilding and Heungkuk Metaltech CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heungkuk Metaltech CoLtd and Daewoo Shipbuilding 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 Daewoo Shipbuilding are associated (or correlated) with Heungkuk Metaltech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heungkuk Metaltech CoLtd has no effect on the direction of Daewoo Shipbuilding i.e., Daewoo Shipbuilding and Heungkuk Metaltech go up and down completely randomly.
Pair Corralation between Daewoo Shipbuilding and Heungkuk Metaltech
Assuming the 90 days trading horizon Daewoo Shipbuilding is expected to under-perform the Heungkuk Metaltech. In addition to that, Daewoo Shipbuilding is 1.77 times more volatile than Heungkuk Metaltech CoLtd. It trades about -0.08 of its total potential returns per unit of risk. Heungkuk Metaltech CoLtd is currently generating about 0.23 per unit of volatility. If you would invest 485,500 in Heungkuk Metaltech CoLtd on September 12, 2024 and sell it today you would earn a total of 77,500 from holding Heungkuk Metaltech CoLtd or generate 15.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daewoo Shipbuilding vs. Heungkuk Metaltech CoLtd
Performance |
| Timeline |
| Daewoo Shipbuilding |
| Heungkuk Metaltech CoLtd |
Daewoo Shipbuilding and Heungkuk Metaltech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daewoo Shipbuilding and Heungkuk Metaltech
The main advantage of trading using opposite Daewoo Shipbuilding and Heungkuk Metaltech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daewoo Shipbuilding position performs unexpectedly, Heungkuk Metaltech 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 Heungkuk Metaltech will offset losses from the drop in Heungkuk Metaltech's long position.| Daewoo Shipbuilding vs. Dongbang Transport Logistics | Daewoo Shipbuilding vs. Sung Bo Chemicals | Daewoo Shipbuilding vs. V One Tech Co | Daewoo Shipbuilding vs. SK Chemicals Co |
| Heungkuk Metaltech vs. Korea New Network | Heungkuk Metaltech vs. Solution Advanced Technology | Heungkuk Metaltech vs. Busan Industrial Co | Heungkuk Metaltech vs. Busan Ind |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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