Correlation Between A Tech and Daedong Gear
Can any of the company-specific risk be diversified away by investing in both A Tech and Daedong Gear 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 A Tech and Daedong Gear into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between A Tech Solution Co and Daedong Gear Co, you can compare the effects of market volatilities on A Tech and Daedong Gear 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 A Tech with a short position of Daedong Gear. Check out your portfolio center. Please also check ongoing floating volatility patterns of A Tech and Daedong Gear.
Diversification Opportunities for A Tech and Daedong Gear
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 071670 and Daedong is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding A Tech Solution Co and Daedong Gear Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daedong Gear and A Tech 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 A Tech Solution Co are associated (or correlated) with Daedong Gear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daedong Gear has no effect on the direction of A Tech i.e., A Tech and Daedong Gear go up and down completely randomly.
Pair Corralation between A Tech and Daedong Gear
Assuming the 90 days trading horizon A Tech Solution Co is expected to under-perform the Daedong Gear. But the stock apears to be less risky and, when comparing its historical volatility, A Tech Solution Co is 1.73 times less risky than Daedong Gear. The stock trades about -0.02 of its potential returns per unit of risk. The Daedong Gear Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 696,685 in Daedong Gear Co on August 31, 2024 and sell it today you would earn a total of 473,315 from holding Daedong Gear Co or generate 67.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
A Tech Solution Co vs. Daedong Gear Co
Performance |
| Timeline |
| A Tech Solution |
| Daedong Gear |
A Tech and Daedong Gear Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with A Tech and Daedong Gear
The main advantage of trading using opposite A Tech and Daedong Gear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if A Tech position performs unexpectedly, Daedong Gear 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 Daedong Gear will offset losses from the drop in Daedong Gear's long position.The idea behind A Tech Solution Co and Daedong Gear Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Daedong Gear vs. Dongkuk Structures Construction | Daedong Gear vs. Polaris Office Corp | Daedong Gear vs. Taegu Broadcasting | Daedong Gear vs. Asiana Airlines |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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