Correlation Between Daewon Media and Kwang Jin
Can any of the company-specific risk be diversified away by investing in both Daewon Media and Kwang Jin 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 Daewon Media and Kwang Jin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daewon Media Co and Kwang Jin Ind, you can compare the effects of market volatilities on Daewon Media and Kwang Jin 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 Daewon Media with a short position of Kwang Jin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daewon Media and Kwang Jin.
Diversification Opportunities for Daewon Media and Kwang Jin
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Daewon and Kwang is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Daewon Media Co and Kwang Jin Ind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kwang Jin Ind and Daewon Media 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 Daewon Media Co are associated (or correlated) with Kwang Jin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kwang Jin Ind has no effect on the direction of Daewon Media i.e., Daewon Media and Kwang Jin go up and down completely randomly.
Pair Corralation between Daewon Media and Kwang Jin
Assuming the 90 days trading horizon Daewon Media Co is expected to generate 0.95 times more return on investment than Kwang Jin. However, Daewon Media Co is 1.05 times less risky than Kwang Jin. It trades about -0.04 of its potential returns per unit of risk. Kwang Jin Ind is currently generating about -0.06 per unit of risk. If you would invest 1,373,352 in Daewon Media Co on September 19, 2024 and sell it today you would lose (583,352) from holding Daewon Media Co or give up 42.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daewon Media Co vs. Kwang Jin Ind
Performance |
| Timeline |
| Daewon Media |
| Kwang Jin Ind |
Daewon Media and Kwang Jin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daewon Media and Kwang Jin
The main advantage of trading using opposite Daewon Media and Kwang Jin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daewon Media position performs unexpectedly, Kwang Jin 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 Kwang Jin will offset losses from the drop in Kwang Jin's long position.| Daewon Media vs. Eugene Investment Securities | Daewon Media vs. DSC Investment | Daewon Media vs. Shinsegae Information Communication | Daewon Media vs. Daishin Information Communications |
| Kwang Jin vs. SK Telecom Co | Kwang Jin vs. Korea Information Communications | Kwang Jin vs. Hansol Homedeco Co | Kwang Jin vs. Kukil 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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