Correlation Between Daejoo Electronic and Histeel
Can any of the company-specific risk be diversified away by investing in both Daejoo Electronic and Histeel 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 Histeel 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 Histeel, you can compare the effects of market volatilities on Daejoo Electronic and Histeel 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 Histeel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daejoo Electronic and Histeel.
Diversification Opportunities for Daejoo Electronic and Histeel
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Daejoo and Histeel is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Daejoo Electronic Materials and Histeel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Histeel 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 Histeel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Histeel has no effect on the direction of Daejoo Electronic i.e., Daejoo Electronic and Histeel go up and down completely randomly.
Pair Corralation between Daejoo Electronic and Histeel
Assuming the 90 days trading horizon Daejoo Electronic Materials is expected to generate 1.33 times more return on investment than Histeel. However, Daejoo Electronic is 1.33 times more volatile than Histeel. It trades about -0.05 of its potential returns per unit of risk. Histeel is currently generating about -0.09 per unit of risk. If you would invest 12,270,000 in Daejoo Electronic Materials on September 3, 2024 and sell it today you would lose (3,960,000) from holding Daejoo Electronic Materials or give up 32.27% 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. Histeel
Performance |
| Timeline |
| Daejoo Electronic |
| Histeel |
Daejoo Electronic and Histeel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daejoo Electronic and Histeel
The main advantage of trading using opposite Daejoo Electronic and Histeel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daejoo Electronic position performs unexpectedly, Histeel 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 Histeel will offset losses from the drop in Histeel's long position.The idea behind Daejoo Electronic Materials and Histeel 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.| Histeel vs. LG Chemicals | Histeel vs. POSCO Holdings | Histeel vs. Hanwha Solutions | Histeel vs. Lotte Chemical 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
Other Complementary Tools
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device |