Correlation Between Innowireless and Daedong Gear
Can any of the company-specific risk be diversified away by investing in both Innowireless 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 Innowireless and Daedong Gear into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innowireless Co and Daedong Gear Co, you can compare the effects of market volatilities on Innowireless 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 Innowireless with a short position of Daedong Gear. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innowireless and Daedong Gear.
Diversification Opportunities for Innowireless and Daedong Gear
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Innowireless and Daedong is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Innowireless 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 Innowireless 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 Innowireless 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 Innowireless i.e., Innowireless and Daedong Gear go up and down completely randomly.
Pair Corralation between Innowireless and Daedong Gear
Assuming the 90 days trading horizon Innowireless Co is expected to under-perform the Daedong Gear. But the stock apears to be less risky and, when comparing its historical volatility, Innowireless Co is 2.28 times less risky than Daedong Gear. The stock trades about -0.04 of its potential returns per unit of risk. The Daedong Gear Co is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 728,276 in Daedong Gear Co on September 12, 2024 and sell it today you would earn a total of 876,724 from holding Daedong Gear Co or generate 120.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.63% |
| Values | Daily Returns |
Innowireless Co vs. Daedong Gear Co
Performance |
| Timeline |
| Innowireless |
| Daedong Gear |
Innowireless and Daedong Gear Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innowireless and Daedong Gear
The main advantage of trading using opposite Innowireless and Daedong Gear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innowireless 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.| Innowireless vs. Samsung Electronics Co | Innowireless vs. Samsung Electronics Co | Innowireless vs. SK Hynix | Innowireless vs. POSCO Holdings |
| Daedong Gear vs. Innowireless Co | Daedong Gear vs. Shinsung Delta Tech | Daedong Gear vs. Amogreentech Co | Daedong Gear vs. Hwangkum Steel Technology |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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