Correlation Between Daejoo Electronic and Interflex
Can any of the company-specific risk be diversified away by investing in both Daejoo Electronic and Interflex 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 Interflex 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 Interflex Co, you can compare the effects of market volatilities on Daejoo Electronic and Interflex 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 Interflex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daejoo Electronic and Interflex.
Diversification Opportunities for Daejoo Electronic and Interflex
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Daejoo and Interflex is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Daejoo Electronic Materials and Interflex Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Interflex 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 Interflex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Interflex has no effect on the direction of Daejoo Electronic i.e., Daejoo Electronic and Interflex go up and down completely randomly.
Pair Corralation between Daejoo Electronic and Interflex
Assuming the 90 days trading horizon Daejoo Electronic Materials is expected to under-perform the Interflex. In addition to that, Daejoo Electronic is 1.62 times more volatile than Interflex Co. It trades about -0.3 of its total potential returns per unit of risk. Interflex Co is currently generating about -0.25 per unit of volatility. If you would invest 993,000 in Interflex Co on August 31, 2024 and sell it today you would lose (118,000) from holding Interflex Co or give up 11.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daejoo Electronic Materials vs. Interflex Co
Performance |
| Timeline |
| Daejoo Electronic |
| Interflex |
Daejoo Electronic and Interflex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daejoo Electronic and Interflex
The main advantage of trading using opposite Daejoo Electronic and Interflex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daejoo Electronic position performs unexpectedly, Interflex 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 Interflex will offset losses from the drop in Interflex's long position.| Daejoo Electronic vs. Dongsin Engineering Construction | Daejoo Electronic vs. Doosan Fuel Cell | Daejoo Electronic vs. Daishin Balance 1 | Daejoo Electronic vs. Total Soft Bank |
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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