Correlation Between Ssangyong Materials and Daou Technology
Can any of the company-specific risk be diversified away by investing in both Ssangyong Materials and Daou Technology 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 Ssangyong Materials and Daou Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ssangyong Materials Corp and Daou Technology, you can compare the effects of market volatilities on Ssangyong Materials and Daou Technology 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 Ssangyong Materials with a short position of Daou Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ssangyong Materials and Daou Technology.
Diversification Opportunities for Ssangyong Materials and Daou Technology
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ssangyong and Daou is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Ssangyong Materials Corp and Daou Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daou Technology and Ssangyong 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 Ssangyong Materials Corp are associated (or correlated) with Daou Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daou Technology has no effect on the direction of Ssangyong Materials i.e., Ssangyong Materials and Daou Technology go up and down completely randomly.
Pair Corralation between Ssangyong Materials and Daou Technology
Assuming the 90 days trading horizon Ssangyong Materials Corp is expected to generate 2.52 times more return on investment than Daou Technology. However, Ssangyong Materials is 2.52 times more volatile than Daou Technology. It trades about 0.12 of its potential returns per unit of risk. Daou Technology is currently generating about 0.01 per unit of risk. If you would invest 217,000 in Ssangyong Materials Corp on October 30, 2024 and sell it today you would earn a total of 10,500 from holding Ssangyong Materials Corp or generate 4.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ssangyong Materials Corp vs. Daou Technology
Performance |
| Timeline |
| Ssangyong Materials Corp |
| Daou Technology |
Ssangyong Materials and Daou Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ssangyong Materials and Daou Technology
The main advantage of trading using opposite Ssangyong Materials and Daou Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ssangyong Materials position performs unexpectedly, Daou Technology 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 Technology will offset losses from the drop in Daou Technology's long position.| Ssangyong Materials vs. KB Financial Group | Ssangyong Materials vs. Shinhan Financial Group | Ssangyong Materials vs. Hana Financial | Ssangyong Materials vs. Woori Financial Group |
| Daou Technology vs. Kisan Telecom Co | Daou Technology vs. MetaLabs Co | Daou Technology vs. SK Telecom Co | Daou Technology vs. Daiyang Metal Co |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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