Correlation Between Daewoo Engineering and Samlip General
Can any of the company-specific risk be diversified away by investing in both Daewoo Engineering and Samlip General 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 Engineering and Samlip General into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daewoo Engineering Construction and Samlip General Foods, you can compare the effects of market volatilities on Daewoo Engineering and Samlip General 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 Engineering with a short position of Samlip General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daewoo Engineering and Samlip General.
Diversification Opportunities for Daewoo Engineering and Samlip General
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Daewoo and Samlip is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Daewoo Engineering Constructio and Samlip General Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samlip General Foods and Daewoo Engineering 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 Engineering Construction are associated (or correlated) with Samlip General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samlip General Foods has no effect on the direction of Daewoo Engineering i.e., Daewoo Engineering and Samlip General go up and down completely randomly.
Pair Corralation between Daewoo Engineering and Samlip General
Assuming the 90 days trading horizon Daewoo Engineering Construction is expected to generate 1.42 times more return on investment than Samlip General. However, Daewoo Engineering is 1.42 times more volatile than Samlip General Foods. It trades about -0.01 of its potential returns per unit of risk. Samlip General Foods is currently generating about -0.04 per unit of risk. If you would invest 423,000 in Daewoo Engineering Construction on December 4, 2024 and sell it today you would lose (84,000) from holding Daewoo Engineering Construction or give up 19.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daewoo Engineering Constructio vs. Samlip General Foods
Performance |
| Timeline |
| Daewoo Engineering |
| Samlip General Foods |
Daewoo Engineering and Samlip General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daewoo Engineering and Samlip General
The main advantage of trading using opposite Daewoo Engineering and Samlip General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daewoo Engineering position performs unexpectedly, Samlip General 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 Samlip General will offset losses from the drop in Samlip General's long position.| Daewoo Engineering vs. InfoBank | ||
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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