Correlation Between Union Materials and Daou Data
Can any of the company-specific risk be diversified away by investing in both Union Materials and Daou Data 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 Union Materials and Daou Data into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Union Materials Corp and Daou Data Corp, you can compare the effects of market volatilities on Union Materials and Daou Data 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 Union Materials with a short position of Daou Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Union Materials and Daou Data.
Diversification Opportunities for Union Materials and Daou Data
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Union and Daou is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Union Materials Corp and Daou Data Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daou Data Corp and Union Materials 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 Union Materials Corp are associated (or correlated) with Daou Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daou Data Corp has no effect on the direction of Union Materials i.e., Union Materials and Daou Data go up and down completely randomly.
Pair Corralation between Union Materials and Daou Data
Assuming the 90 days trading horizon Union Materials Corp is expected to generate 1.88 times more return on investment than Daou Data. However, Union Materials is 1.88 times more volatile than Daou Data Corp. It trades about 0.08 of its potential returns per unit of risk. Daou Data Corp is currently generating about -0.06 per unit of risk. If you would invest 218,500 in Union Materials Corp on September 13, 2024 and sell it today you would earn a total of 11,000 from holding Union Materials Corp or generate 5.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Union Materials Corp vs. Daou Data Corp
Performance |
| Timeline |
| Union Materials Corp |
| Daou Data Corp |
Union Materials and Daou Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Union Materials and Daou Data
The main advantage of trading using opposite Union Materials and Daou Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Union Materials position performs unexpectedly, Daou Data 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 Daou Data will offset losses from the drop in Daou Data's long position.| Union Materials vs. Daou Data Corp | Union Materials vs. Solution Advanced Technology | Union Materials vs. Busan Industrial Co | Union Materials vs. Busan Ind |
| Daou Data vs. KB Financial Group | Daou Data vs. Shinhan Financial Group | Daou Data vs. Hana Financial | Daou Data vs. Woori Financial Group |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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