Correlation Between Daejoo Electronic and RFTech
Can any of the company-specific risk be diversified away by investing in both Daejoo Electronic and RFTech 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 RFTech 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 RFTech Co, you can compare the effects of market volatilities on Daejoo Electronic and RFTech 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 RFTech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daejoo Electronic and RFTech.
Diversification Opportunities for Daejoo Electronic and RFTech
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Daejoo and RFTech is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Daejoo Electronic Materials and RFTech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RFTech 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 RFTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RFTech has no effect on the direction of Daejoo Electronic i.e., Daejoo Electronic and RFTech go up and down completely randomly.
Pair Corralation between Daejoo Electronic and RFTech
Assuming the 90 days trading horizon Daejoo Electronic Materials is expected to generate 3.04 times more return on investment than RFTech. However, Daejoo Electronic is 3.04 times more volatile than RFTech Co. It trades about 0.34 of its potential returns per unit of risk. RFTech Co is currently generating about -0.15 per unit of risk. If you would invest 7,480,000 in Daejoo Electronic Materials on October 29, 2024 and sell it today you would earn a total of 2,850,000 from holding Daejoo Electronic Materials or generate 38.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daejoo Electronic Materials vs. RFTech Co
Performance |
| Timeline |
| Daejoo Electronic |
| RFTech |
Daejoo Electronic and RFTech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daejoo Electronic and RFTech
The main advantage of trading using opposite Daejoo Electronic and RFTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daejoo Electronic position performs unexpectedly, RFTech 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 RFTech will offset losses from the drop in RFTech's long position.The idea behind Daejoo Electronic Materials and RFTech 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.| RFTech vs. Daol Investment Securities | RFTech vs. Dongnam Chemical Co | RFTech vs. KTB Investment Securities | RFTech vs. Korea Petro Chemical |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
Other Complementary Tools
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments |