Correlation Between Daejoo Electronic and BYON
Can any of the company-specific risk be diversified away by investing in both Daejoo Electronic and BYON 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 BYON 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 BYON Co, you can compare the effects of market volatilities on Daejoo Electronic and BYON 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 BYON. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daejoo Electronic and BYON.
Diversification Opportunities for Daejoo Electronic and BYON
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Daejoo and BYON is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Daejoo Electronic Materials and BYON Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BYON 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 BYON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BYON has no effect on the direction of Daejoo Electronic i.e., Daejoo Electronic and BYON go up and down completely randomly.
Pair Corralation between Daejoo Electronic and BYON
Assuming the 90 days trading horizon Daejoo Electronic Materials is expected to under-perform the BYON. But the stock apears to be less risky and, when comparing its historical volatility, Daejoo Electronic Materials is 1.78 times less risky than BYON. The stock trades about -0.26 of its potential returns per unit of risk. The BYON Co is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 65,200 in BYON Co on August 29, 2024 and sell it today you would earn a total of 18,800 from holding BYON Co or generate 28.83% 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. BYON Co
Performance |
| Timeline |
| Daejoo Electronic |
| BYON |
Daejoo Electronic and BYON Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daejoo Electronic and BYON
The main advantage of trading using opposite Daejoo Electronic and BYON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daejoo Electronic position performs unexpectedly, BYON 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 BYON will offset losses from the drop in BYON's long position.The idea behind Daejoo Electronic Materials and BYON Co 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.| BYON vs. Derkwoo Electronics Co | BYON vs. Digital Power Communications | BYON vs. Daejoo Electronic Materials | BYON vs. LG Electronics |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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