Correlation Between Daejoo Electronic and SCI Information
Can any of the company-specific risk be diversified away by investing in both Daejoo Electronic and SCI 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 SCI 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 SCI Information Service, you can compare the effects of market volatilities on Daejoo Electronic and SCI 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 SCI Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daejoo Electronic and SCI Information.
Diversification Opportunities for Daejoo Electronic and SCI Information
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Daejoo and SCI is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Daejoo Electronic Materials and SCI Information Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCI Information Service 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 SCI Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCI Information Service has no effect on the direction of Daejoo Electronic i.e., Daejoo Electronic and SCI Information go up and down completely randomly.
Pair Corralation between Daejoo Electronic and SCI Information
Assuming the 90 days trading horizon Daejoo Electronic Materials is expected to generate 3.7 times more return on investment than SCI Information. However, Daejoo Electronic is 3.7 times more volatile than SCI Information Service. It trades about 0.4 of its potential returns per unit of risk. SCI Information Service is currently generating about -0.18 per unit of risk. If you would invest 7,240,000 in Daejoo Electronic Materials on November 2, 2024 and sell it today you would earn a total of 3,090,000 from holding Daejoo Electronic Materials or generate 42.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daejoo Electronic Materials vs. SCI Information Service
Performance |
| Timeline |
| Daejoo Electronic |
| SCI Information Service |
Daejoo Electronic and SCI Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daejoo Electronic and SCI Information
The main advantage of trading using opposite Daejoo Electronic and SCI Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daejoo Electronic position performs unexpectedly, SCI 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 SCI Information will offset losses from the drop in SCI Information's long position.The idea behind Daejoo Electronic Materials and SCI Information Service 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.| SCI Information vs. Jinro Distillers Co | SCI Information vs. A Tech Solution Co | SCI Information vs. CU Medical Systems | SCI Information vs. Infinitt Healthcare 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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