Correlation Between Daejoo Electronic and Seoul Food
Can any of the company-specific risk be diversified away by investing in both Daejoo Electronic and Seoul Food 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 Seoul Food 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 Seoul Food Industrial, you can compare the effects of market volatilities on Daejoo Electronic and Seoul Food 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 Seoul Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daejoo Electronic and Seoul Food.
Diversification Opportunities for Daejoo Electronic and Seoul Food
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Daejoo and Seoul is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Daejoo Electronic Materials and Seoul Food Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seoul Food Industrial 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 Seoul Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seoul Food Industrial has no effect on the direction of Daejoo Electronic i.e., Daejoo Electronic and Seoul Food go up and down completely randomly.
Pair Corralation between Daejoo Electronic and Seoul Food
Assuming the 90 days trading horizon Daejoo Electronic Materials is expected to generate 2.84 times more return on investment than Seoul Food. However, Daejoo Electronic is 2.84 times more volatile than Seoul Food Industrial. It trades about 0.03 of its potential returns per unit of risk. Seoul Food Industrial is currently generating about -0.05 per unit of risk. If you would invest 8,739,583 in Daejoo Electronic Materials on October 26, 2024 and sell it today you would earn a total of 1,590,417 from holding Daejoo Electronic Materials or generate 18.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daejoo Electronic Materials vs. Seoul Food Industrial
Performance |
| Timeline |
| Daejoo Electronic |
| Seoul Food Industrial |
Daejoo Electronic and Seoul Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daejoo Electronic and Seoul Food
The main advantage of trading using opposite Daejoo Electronic and Seoul Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daejoo Electronic position performs unexpectedly, Seoul Food 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 Seoul Food will offset losses from the drop in Seoul Food's long position.| Daejoo Electronic vs. Samsung Electronics Co | Daejoo Electronic vs. Samsung Electronics Co | Daejoo Electronic vs. SK Hynix | Daejoo Electronic vs. HMM Co |
| Seoul Food vs. Youngchang Chemical Co | Seoul Food vs. Formetal Co | Seoul Food vs. Kukil Metal Co | Seoul Food vs. Youngsin Metal Industrial |
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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