Correlation Between Daejoo Electronic and Youngsin Metal
Can any of the company-specific risk be diversified away by investing in both Daejoo Electronic and Youngsin Metal 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 Youngsin Metal 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 Youngsin Metal Industrial, you can compare the effects of market volatilities on Daejoo Electronic and Youngsin Metal 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 Youngsin Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daejoo Electronic and Youngsin Metal.
Diversification Opportunities for Daejoo Electronic and Youngsin Metal
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Daejoo and Youngsin is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Daejoo Electronic Materials and Youngsin Metal Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Youngsin Metal 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 Youngsin Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Youngsin Metal Industrial has no effect on the direction of Daejoo Electronic i.e., Daejoo Electronic and Youngsin Metal go up and down completely randomly.
Pair Corralation between Daejoo Electronic and Youngsin Metal
Assuming the 90 days trading horizon Daejoo Electronic Materials is expected to generate 1.62 times more return on investment than Youngsin Metal. However, Daejoo Electronic is 1.62 times more volatile than Youngsin Metal Industrial. It trades about 0.02 of its potential returns per unit of risk. Youngsin Metal Industrial is currently generating about -0.02 per unit of risk. If you would invest 9,678,464 in Daejoo Electronic Materials on October 31, 2024 and sell it today you would earn a total of 651,536 from holding Daejoo Electronic Materials or generate 6.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daejoo Electronic Materials vs. Youngsin Metal Industrial
Performance |
| Timeline |
| Daejoo Electronic |
| Youngsin Metal Industrial |
Daejoo Electronic and Youngsin Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daejoo Electronic and Youngsin Metal
The main advantage of trading using opposite Daejoo Electronic and Youngsin Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daejoo Electronic position performs unexpectedly, Youngsin Metal 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 Youngsin Metal will offset losses from the drop in Youngsin Metal's long position.The idea behind Daejoo Electronic Materials and Youngsin Metal Industrial 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.| Youngsin Metal vs. Samsung Electronics Co | Youngsin Metal vs. Samsung Electronics Co | Youngsin Metal vs. KB Financial Group | Youngsin Metal vs. Shinhan Financial Group |
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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