Correlation Between Elentec and Cheryong Electric
Can any of the company-specific risk be diversified away by investing in both Elentec and Cheryong Electric 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 Elentec and Cheryong Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elentec Co and Cheryong Electric CoLtd, you can compare the effects of market volatilities on Elentec and Cheryong Electric 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 Elentec with a short position of Cheryong Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elentec and Cheryong Electric.
Diversification Opportunities for Elentec and Cheryong Electric
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Elentec and Cheryong is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Elentec Co and Cheryong Electric CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheryong Electric CoLtd and Elentec 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 Elentec Co are associated (or correlated) with Cheryong Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheryong Electric CoLtd has no effect on the direction of Elentec i.e., Elentec and Cheryong Electric go up and down completely randomly.
Pair Corralation between Elentec and Cheryong Electric
Assuming the 90 days trading horizon Elentec Co is expected to under-perform the Cheryong Electric. But the stock apears to be less risky and, when comparing its historical volatility, Elentec Co is 1.63 times less risky than Cheryong Electric. The stock trades about -0.1 of its potential returns per unit of risk. The Cheryong Electric CoLtd is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 5,334,900 in Cheryong Electric CoLtd on November 2, 2024 and sell it today you would earn a total of 765,100 from holding Cheryong Electric CoLtd or generate 14.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elentec Co vs. Cheryong Electric CoLtd
Performance |
| Timeline |
| Elentec |
| Cheryong Electric CoLtd |
Elentec and Cheryong Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elentec and Cheryong Electric
The main advantage of trading using opposite Elentec and Cheryong Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elentec position performs unexpectedly, Cheryong Electric 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 Cheryong Electric will offset losses from the drop in Cheryong Electric's long position.| Elentec vs. Samsung Electronics Co | Elentec vs. Samsung Electronics Co | Elentec vs. KB Financial Group | Elentec vs. Shinhan Financial Group |
| Cheryong Electric vs. Dawonsys CoLtd | Cheryong Electric vs. Elentec Co | Cheryong Electric vs. Robostar CoLtd | Cheryong Electric vs. HyVision System |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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