Correlation Between Daewoo Engineering and Daekyung Machinery
Can any of the company-specific risk be diversified away by investing in both Daewoo Engineering and Daekyung Machinery 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 Daekyung Machinery 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 Daekyung Machinery Engineering, you can compare the effects of market volatilities on Daewoo Engineering and Daekyung Machinery 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 Daekyung Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daewoo Engineering and Daekyung Machinery.
Diversification Opportunities for Daewoo Engineering and Daekyung Machinery
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Daewoo and Daekyung is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Daewoo Engineering Constructio and Daekyung Machinery Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daekyung Machinery 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 Daekyung Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daekyung Machinery has no effect on the direction of Daewoo Engineering i.e., Daewoo Engineering and Daekyung Machinery go up and down completely randomly.
Pair Corralation between Daewoo Engineering and Daekyung Machinery
Assuming the 90 days trading horizon Daewoo Engineering is expected to generate 10.04 times less return on investment than Daekyung Machinery. But when comparing it to its historical volatility, Daewoo Engineering Construction is 1.58 times less risky than Daekyung Machinery. It trades about 0.05 of its potential returns per unit of risk. Daekyung Machinery Engineering is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 40,800 in Daekyung Machinery Engineering on August 29, 2024 and sell it today you would earn a total of 10,700 from holding Daekyung Machinery Engineering or generate 26.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daewoo Engineering Constructio vs. Daekyung Machinery Engineering
Performance |
| Timeline |
| Daewoo Engineering |
| Daekyung Machinery |
Daewoo Engineering and Daekyung Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daewoo Engineering and Daekyung Machinery
The main advantage of trading using opposite Daewoo Engineering and Daekyung Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daewoo Engineering position performs unexpectedly, Daekyung Machinery 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 Daekyung Machinery will offset losses from the drop in Daekyung Machinery's long position.| Daewoo Engineering vs. Alton Sports CoLtd | Daewoo Engineering vs. BNK Financial Group | Daewoo Engineering vs. KakaoBank Corp | Daewoo Engineering vs. Hana Financial |
| Daekyung Machinery vs. AptaBio Therapeutics | Daekyung Machinery vs. Daewoo SBI SPAC | Daekyung Machinery vs. Dream Security co | Daekyung Machinery 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance |