Correlation Between Daejoo Electronic and Bohae Brewery
Can any of the company-specific risk be diversified away by investing in both Daejoo Electronic and Bohae Brewery 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 Daejoo Electronic and Bohae Brewery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daejoo Electronic Materials and Bohae Brewery, you can compare the effects of market volatilities on Daejoo Electronic and Bohae Brewery 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 Daejoo Electronic with a short position of Bohae Brewery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daejoo Electronic and Bohae Brewery.
Diversification Opportunities for Daejoo Electronic and Bohae Brewery
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Daejoo and Bohae is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Daejoo Electronic Materials and Bohae Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bohae Brewery and Daejoo Electronic 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 Daejoo Electronic Materials are associated (or correlated) with Bohae Brewery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bohae Brewery has no effect on the direction of Daejoo Electronic i.e., Daejoo Electronic and Bohae Brewery go up and down completely randomly.
Pair Corralation between Daejoo Electronic and Bohae Brewery
Assuming the 90 days trading horizon Daejoo Electronic Materials is expected to under-perform the Bohae Brewery. But the stock apears to be less risky and, when comparing its historical volatility, Daejoo Electronic Materials is 2.17 times less risky than Bohae Brewery. The stock trades about -0.33 of its potential returns per unit of risk. The Bohae Brewery is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 42,300 in Bohae Brewery on September 1, 2024 and sell it today you would earn a total of 4,300 from holding Bohae Brewery or generate 10.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daejoo Electronic Materials vs. Bohae Brewery
Performance |
| Timeline |
| Daejoo Electronic |
| Bohae Brewery |
Daejoo Electronic and Bohae Brewery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daejoo Electronic and Bohae Brewery
The main advantage of trading using opposite Daejoo Electronic and Bohae Brewery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daejoo Electronic position performs unexpectedly, Bohae Brewery 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 Bohae Brewery will offset losses from the drop in Bohae Brewery's long position.| Daejoo Electronic vs. Dongsin Engineering Construction | Daejoo Electronic vs. Doosan Fuel Cell | Daejoo Electronic vs. Daishin Balance 1 | Daejoo Electronic vs. Total Soft Bank |
| Bohae Brewery vs. Korea Real Estate | Bohae Brewery vs. Korea Ratings Co | Bohae Brewery vs. IQuest Co | Bohae Brewery vs. Wonbang Tech 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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