Correlation Between Daewoo Engineering and Haitai Confectionery
Can any of the company-specific risk be diversified away by investing in both Daewoo Engineering and Haitai Confectionery 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 Haitai Confectionery 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 Haitai Confectionery Foods, you can compare the effects of market volatilities on Daewoo Engineering and Haitai Confectionery 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 Haitai Confectionery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daewoo Engineering and Haitai Confectionery.
Diversification Opportunities for Daewoo Engineering and Haitai Confectionery
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Daewoo and Haitai is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Daewoo Engineering Constructio and Haitai Confectionery Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haitai Confectionery 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 Haitai Confectionery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haitai Confectionery has no effect on the direction of Daewoo Engineering i.e., Daewoo Engineering and Haitai Confectionery go up and down completely randomly.
Pair Corralation between Daewoo Engineering and Haitai Confectionery
Assuming the 90 days trading horizon Daewoo Engineering Construction is expected to generate 1.73 times more return on investment than Haitai Confectionery. However, Daewoo Engineering is 1.73 times more volatile than Haitai Confectionery Foods. It trades about 0.16 of its potential returns per unit of risk. Haitai Confectionery Foods is currently generating about 0.22 per unit of risk. If you would invest 337,500 in Daewoo Engineering Construction on November 27, 2024 and sell it today you would earn a total of 21,500 from holding Daewoo Engineering Construction or generate 6.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daewoo Engineering Constructio vs. Haitai Confectionery Foods
Performance |
| Timeline |
| Daewoo Engineering |
| Haitai Confectionery |
Daewoo Engineering and Haitai Confectionery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daewoo Engineering and Haitai Confectionery
The main advantage of trading using opposite Daewoo Engineering and Haitai Confectionery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daewoo Engineering position performs unexpectedly, Haitai Confectionery 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 Haitai Confectionery will offset losses from the drop in Haitai Confectionery's long position.| Daewoo Engineering vs. Bookook Steel | Daewoo Engineering vs. Hyundai BNG Steel | Daewoo Engineering vs. GAMEVIL | Daewoo Engineering vs. Netmarble Games Corp |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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