Correlation Between Daewoo Engineering and Cytogen
Can any of the company-specific risk be diversified away by investing in both Daewoo Engineering and Cytogen 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 Cytogen 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 Cytogen, you can compare the effects of market volatilities on Daewoo Engineering and Cytogen 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 Cytogen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daewoo Engineering and Cytogen.
Diversification Opportunities for Daewoo Engineering and Cytogen
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Daewoo and Cytogen is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Daewoo Engineering Constructio and Cytogen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cytogen 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 Cytogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cytogen has no effect on the direction of Daewoo Engineering i.e., Daewoo Engineering and Cytogen go up and down completely randomly.
Pair Corralation between Daewoo Engineering and Cytogen
Assuming the 90 days trading horizon Daewoo Engineering Construction is expected to generate 0.89 times more return on investment than Cytogen. However, Daewoo Engineering Construction is 1.13 times less risky than Cytogen. It trades about -0.01 of its potential returns per unit of risk. Cytogen is currently generating about -0.07 per unit of risk. If you would invest 323,500 in Daewoo Engineering Construction on November 7, 2024 and sell it today you would lose (2,000) from holding Daewoo Engineering Construction or give up 0.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daewoo Engineering Constructio vs. Cytogen
Performance |
| Timeline |
| Daewoo Engineering |
| Cytogen |
Daewoo Engineering and Cytogen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daewoo Engineering and Cytogen
The main advantage of trading using opposite Daewoo Engineering and Cytogen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daewoo Engineering position performs unexpectedly, Cytogen 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 Cytogen will offset losses from the drop in Cytogen's long position.| Daewoo Engineering vs. Samsung Card Co | Daewoo Engineering vs. EBEST Investment Securities | Daewoo Engineering vs. Koh Young Technology | Daewoo Engineering vs. Hansol Chemica |
| Cytogen vs. Vitzro Tech Co | Cytogen vs. BNK Financial Group | Cytogen vs. KB Financial Group | Cytogen vs. Samsung Life Insurance |
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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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