Correlation Between Daejoo Electronic and Daishin Information
Can any of the company-specific risk be diversified away by investing in both Daejoo Electronic and Daishin Information 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 Daishin Information 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 Daishin Information Communications, you can compare the effects of market volatilities on Daejoo Electronic and Daishin Information 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 Daishin Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daejoo Electronic and Daishin Information.
Diversification Opportunities for Daejoo Electronic and Daishin Information
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Daejoo and Daishin is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Daejoo Electronic Materials and Daishin Information Communicat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daishin Information 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 Daishin Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daishin Information has no effect on the direction of Daejoo Electronic i.e., Daejoo Electronic and Daishin Information go up and down completely randomly.
Pair Corralation between Daejoo Electronic and Daishin Information
Assuming the 90 days trading horizon Daejoo Electronic Materials is expected to generate 2.77 times more return on investment than Daishin Information. However, Daejoo Electronic is 2.77 times more volatile than Daishin Information Communications. It trades about 0.04 of its potential returns per unit of risk. Daishin Information Communications is currently generating about -0.09 per unit of risk. If you would invest 7,520,000 in Daejoo Electronic Materials on August 27, 2024 and sell it today you would earn a total of 1,200,000 from holding Daejoo Electronic Materials or generate 15.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daejoo Electronic Materials vs. Daishin Information Communicat
Performance |
| Timeline |
| Daejoo Electronic |
| Daishin Information |
Daejoo Electronic and Daishin Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daejoo Electronic and Daishin Information
The main advantage of trading using opposite Daejoo Electronic and Daishin Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daejoo Electronic position performs unexpectedly, Daishin Information 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 Daishin Information will offset losses from the drop in Daishin Information's long position.| Daejoo Electronic vs. Korea Real Estate | Daejoo Electronic vs. Korea Ratings Co | Daejoo Electronic vs. IQuest Co | Daejoo Electronic vs. Wonbang Tech Co |
| Daishin Information vs. Lotte Data Communication | Daishin Information vs. Duksan Hi Metal | Daishin Information vs. SK Telecom Co | Daishin Information vs. Shinsegae Information Communication |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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