Correlation Between Daewoo Engineering and Daishin Balance
Can any of the company-specific risk be diversified away by investing in both Daewoo Engineering and Daishin Balance 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 Daishin Balance 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 Daishin Balance No8, you can compare the effects of market volatilities on Daewoo Engineering and Daishin Balance 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 Daishin Balance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daewoo Engineering and Daishin Balance.
Diversification Opportunities for Daewoo Engineering and Daishin Balance
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Daewoo and Daishin is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Daewoo Engineering Constructio and Daishin Balance No8 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daishin Balance No8 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 Daishin Balance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daishin Balance No8 has no effect on the direction of Daewoo Engineering i.e., Daewoo Engineering and Daishin Balance go up and down completely randomly.
Pair Corralation between Daewoo Engineering and Daishin Balance
Assuming the 90 days trading horizon Daewoo Engineering is expected to generate 2.79 times less return on investment than Daishin Balance. But when comparing it to its historical volatility, Daewoo Engineering Construction is 2.14 times less risky than Daishin Balance. It trades about 0.24 of its potential returns per unit of risk. Daishin Balance No8 is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 439,500 in Daishin Balance No8 on October 30, 2024 and sell it today you would earn a total of 109,500 from holding Daishin Balance No8 or generate 24.91% 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. Daishin Balance No8
Performance |
| Timeline |
| Daewoo Engineering |
| Daishin Balance No8 |
Daewoo Engineering and Daishin Balance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daewoo Engineering and Daishin Balance
The main advantage of trading using opposite Daewoo Engineering and Daishin Balance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daewoo Engineering position performs unexpectedly, Daishin Balance 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 Daishin Balance will offset losses from the drop in Daishin Balance's long position.| Daewoo Engineering vs. Samsung Electronics Co | Daewoo Engineering vs. Samsung Electronics Co | Daewoo Engineering vs. KB Financial Group | Daewoo Engineering vs. Shinhan Financial Group |
| Daishin Balance vs. Chorokbaem Healthcare Co | Daishin Balance vs. Echomarketing CoLtd | Daishin Balance vs. Dongnam Chemical Co | Daishin Balance vs. TK Chemical |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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