Correlation Between Daejoo Electronic and Sunny Electronics
Can any of the company-specific risk be diversified away by investing in both Daejoo Electronic and Sunny Electronics 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 Sunny Electronics 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 Sunny Electronics Corp, you can compare the effects of market volatilities on Daejoo Electronic and Sunny Electronics 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 Sunny Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daejoo Electronic and Sunny Electronics.
Diversification Opportunities for Daejoo Electronic and Sunny Electronics
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Daejoo and Sunny is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Daejoo Electronic Materials and Sunny Electronics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunny Electronics Corp 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 Sunny Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunny Electronics Corp has no effect on the direction of Daejoo Electronic i.e., Daejoo Electronic and Sunny Electronics go up and down completely randomly.
Pair Corralation between Daejoo Electronic and Sunny Electronics
Assuming the 90 days trading horizon Daejoo Electronic Materials is expected to under-perform the Sunny Electronics. In addition to that, Daejoo Electronic is 1.93 times more volatile than Sunny Electronics Corp. It trades about -0.21 of its total potential returns per unit of risk. Sunny Electronics Corp is currently generating about -0.01 per unit of volatility. If you would invest 158,400 in Sunny Electronics Corp on August 25, 2024 and sell it today you would lose (1,400) from holding Sunny Electronics Corp or give up 0.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daejoo Electronic Materials vs. Sunny Electronics Corp
Performance |
| Timeline |
| Daejoo Electronic |
| Sunny Electronics Corp |
Daejoo Electronic and Sunny Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daejoo Electronic and Sunny Electronics
The main advantage of trading using opposite Daejoo Electronic and Sunny Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daejoo Electronic position performs unexpectedly, Sunny Electronics 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 Sunny Electronics will offset losses from the drop in Sunny Electronics' long position.The idea behind Daejoo Electronic Materials and Sunny Electronics Corp 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.| Sunny Electronics vs. AptaBio Therapeutics | Sunny Electronics vs. Daewoo SBI SPAC | Sunny Electronics vs. Dream Security co | Sunny Electronics vs. Microfriend |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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