Correlation Between Daejoo Electronic and Wonil Special
Can any of the company-specific risk be diversified away by investing in both Daejoo Electronic and Wonil Special 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 Wonil Special 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 Wonil Special Steel, you can compare the effects of market volatilities on Daejoo Electronic and Wonil Special 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 Wonil Special. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daejoo Electronic and Wonil Special.
Diversification Opportunities for Daejoo Electronic and Wonil Special
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Daejoo and Wonil is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Daejoo Electronic Materials and Wonil Special Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wonil Special Steel 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 Wonil Special. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wonil Special Steel has no effect on the direction of Daejoo Electronic i.e., Daejoo Electronic and Wonil Special go up and down completely randomly.
Pair Corralation between Daejoo Electronic and Wonil Special
Assuming the 90 days trading horizon Daejoo Electronic Materials is expected to under-perform the Wonil Special. In addition to that, Daejoo Electronic is 3.07 times more volatile than Wonil Special Steel. It trades about -0.05 of its total potential returns per unit of risk. Wonil Special Steel is currently generating about -0.07 per unit of volatility. If you would invest 842,000 in Wonil Special Steel on September 3, 2024 and sell it today you would lose (114,000) from holding Wonil Special Steel or give up 13.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daejoo Electronic Materials vs. Wonil Special Steel
Performance |
| Timeline |
| Daejoo Electronic |
| Wonil Special Steel |
Daejoo Electronic and Wonil Special Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daejoo Electronic and Wonil Special
The main advantage of trading using opposite Daejoo Electronic and Wonil Special positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daejoo Electronic position performs unexpectedly, Wonil Special 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 Wonil Special will offset losses from the drop in Wonil Special's long position.The idea behind Daejoo Electronic Materials and Wonil Special Steel 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.| Wonil Special vs. Samwha Electronics Co | Wonil Special vs. KyungIn Electronics Co | Wonil Special vs. Daou Technology | Wonil Special vs. Cuckoo Electronics 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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