Correlation Between Daejoo Electronic and Daol Investment
Can any of the company-specific risk be diversified away by investing in both Daejoo Electronic and Daol Investment 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 Daol Investment 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 Daol Investment Securities, you can compare the effects of market volatilities on Daejoo Electronic and Daol Investment 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 Daol Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daejoo Electronic and Daol Investment.
Diversification Opportunities for Daejoo Electronic and Daol Investment
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Daejoo and Daol is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Daejoo Electronic Materials and Daol Investment Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daol Investment Secu 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 Daol Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daol Investment Secu has no effect on the direction of Daejoo Electronic i.e., Daejoo Electronic and Daol Investment go up and down completely randomly.
Pair Corralation between Daejoo Electronic and Daol Investment
Assuming the 90 days trading horizon Daejoo Electronic Materials is expected to generate 2.9 times more return on investment than Daol Investment. However, Daejoo Electronic is 2.9 times more volatile than Daol Investment Securities. It trades about 0.28 of its potential returns per unit of risk. Daol Investment Securities is currently generating about -0.17 per unit of risk. If you would invest 8,100,000 in Daejoo Electronic Materials on November 7, 2024 and sell it today you would earn a total of 2,150,000 from holding Daejoo Electronic Materials or generate 26.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daejoo Electronic Materials vs. Daol Investment Securities
Performance |
| Timeline |
| Daejoo Electronic |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
| Daol Investment Secu |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
Daejoo Electronic and Daol Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daejoo Electronic and Daol Investment
The main advantage of trading using opposite Daejoo Electronic and Daol Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daejoo Electronic position performs unexpectedly, Daol Investment 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 Daol Investment will offset losses from the drop in Daol Investment's long position.The idea behind Daejoo Electronic Materials and Daol Investment Securities 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.| Daol Investment vs. Ewon Comfortech Co | Daol Investment vs. V One Tech Co | Daol Investment vs. Yura Tech Co | Daol Investment vs. Ssangyong Materials Corp |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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