Correlation Between Daejoo Electronic and Dongsin Engineering
Can any of the company-specific risk be diversified away by investing in both Daejoo Electronic and Dongsin Engineering 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 Dongsin Engineering 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 Dongsin Engineering Construction, you can compare the effects of market volatilities on Daejoo Electronic and Dongsin Engineering 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 Dongsin Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daejoo Electronic and Dongsin Engineering.
Diversification Opportunities for Daejoo Electronic and Dongsin Engineering
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Daejoo and Dongsin is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Daejoo Electronic Materials and Dongsin Engineering Constructi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongsin Engineering 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 Dongsin Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongsin Engineering has no effect on the direction of Daejoo Electronic i.e., Daejoo Electronic and Dongsin Engineering go up and down completely randomly.
Pair Corralation between Daejoo Electronic and Dongsin Engineering
Assuming the 90 days trading horizon Daejoo Electronic Materials is expected to under-perform the Dongsin Engineering. But the stock apears to be less risky and, when comparing its historical volatility, Daejoo Electronic Materials is 2.89 times less risky than Dongsin Engineering. The stock trades about -0.36 of its potential returns per unit of risk. The Dongsin Engineering Construction is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 2,300,000 in Dongsin Engineering Construction on September 3, 2024 and sell it today you would lose (378,000) from holding Dongsin Engineering Construction or give up 16.43% 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. Dongsin Engineering Constructi
Performance |
| Timeline |
| Daejoo Electronic |
| Dongsin Engineering |
Daejoo Electronic and Dongsin Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daejoo Electronic and Dongsin Engineering
The main advantage of trading using opposite Daejoo Electronic and Dongsin Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daejoo Electronic position performs unexpectedly, Dongsin Engineering 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 Dongsin Engineering will offset losses from the drop in Dongsin Engineering's long position.The idea behind Daejoo Electronic Materials and Dongsin Engineering Construction 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.| Dongsin Engineering vs. DB Financial Investment | Dongsin Engineering vs. EBEST Investment Securities | Dongsin Engineering vs. Stic Investments | Dongsin Engineering vs. Sangsangin Investment Securities |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Transaction History View history of all your transactions and understand their impact on performance |