Correlation Between Daewoo Engineering and Youl Chon
Can any of the company-specific risk be diversified away by investing in both Daewoo Engineering and Youl Chon 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 Youl Chon 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 Youl Chon Chemical, you can compare the effects of market volatilities on Daewoo Engineering and Youl Chon 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 Youl Chon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daewoo Engineering and Youl Chon.
Diversification Opportunities for Daewoo Engineering and Youl Chon
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Daewoo and Youl is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Daewoo Engineering Constructio and Youl Chon Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Youl Chon Chemical 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 Youl Chon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Youl Chon Chemical has no effect on the direction of Daewoo Engineering i.e., Daewoo Engineering and Youl Chon go up and down completely randomly.
Pair Corralation between Daewoo Engineering and Youl Chon
Assuming the 90 days trading horizon Daewoo Engineering Construction is expected to generate 0.53 times more return on investment than Youl Chon. However, Daewoo Engineering Construction is 1.89 times less risky than Youl Chon. It trades about -0.01 of its potential returns per unit of risk. Youl Chon Chemical is currently generating about -0.01 per unit of risk. If you would invest 438,500 in Daewoo Engineering Construction on August 31, 2024 and sell it today you would lose (64,000) from holding Daewoo Engineering Construction or give up 14.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.72% |
| Values | Daily Returns |
Daewoo Engineering Constructio vs. Youl Chon Chemical
Performance |
| Timeline |
| Daewoo Engineering |
| Youl Chon Chemical |
Daewoo Engineering and Youl Chon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daewoo Engineering and Youl Chon
The main advantage of trading using opposite Daewoo Engineering and Youl Chon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daewoo Engineering position performs unexpectedly, Youl Chon 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 Youl Chon will offset losses from the drop in Youl Chon's long position.| Daewoo Engineering vs. Air Busan Co | Daewoo Engineering vs. Korea Air Svc | Daewoo Engineering vs. Cloud Air CoLtd | Daewoo Engineering vs. Jeju Air Co |
| Youl Chon vs. AptaBio Therapeutics | Youl Chon vs. Daewoo SBI SPAC | Youl Chon vs. Dream Security co | Youl Chon vs. Microfriend |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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