Correlation Between Daejoo Electronic and Hanwha Life
Can any of the company-specific risk be diversified away by investing in both Daejoo Electronic and Hanwha Life 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 Hanwha Life 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 Hanwha Life Insurance, you can compare the effects of market volatilities on Daejoo Electronic and Hanwha Life 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 Hanwha Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daejoo Electronic and Hanwha Life.
Diversification Opportunities for Daejoo Electronic and Hanwha Life
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Daejoo and Hanwha is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Daejoo Electronic Materials and Hanwha Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanwha Life Insurance 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 Hanwha Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanwha Life Insurance has no effect on the direction of Daejoo Electronic i.e., Daejoo Electronic and Hanwha Life go up and down completely randomly.
Pair Corralation between Daejoo Electronic and Hanwha Life
Assuming the 90 days trading horizon Daejoo Electronic Materials is expected to generate 9.33 times more return on investment than Hanwha Life. However, Daejoo Electronic is 9.33 times more volatile than Hanwha Life Insurance. It trades about 0.18 of its potential returns per unit of risk. Hanwha Life Insurance is currently generating about -0.17 per unit of risk. If you would invest 8,100,000 in Daejoo Electronic Materials on November 5, 2024 and sell it today you would earn a total of 1,330,000 from holding Daejoo Electronic Materials or generate 16.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daejoo Electronic Materials vs. Hanwha Life Insurance
Performance |
| Timeline |
| Daejoo Electronic |
| Hanwha Life Insurance |
Daejoo Electronic and Hanwha Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daejoo Electronic and Hanwha Life
The main advantage of trading using opposite Daejoo Electronic and Hanwha Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daejoo Electronic position performs unexpectedly, Hanwha Life 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 Hanwha Life will offset losses from the drop in Hanwha Life's long position.| Daejoo Electronic vs. Samsung Electronics Co | Daejoo Electronic vs. Samsung Electronics Co | Daejoo Electronic vs. Hyundai Motor Co | Daejoo Electronic vs. Hyundai Motor |
| Hanwha Life vs. AptaBio Therapeutics | Hanwha Life vs. Daewoo SBI SPAC | Hanwha Life vs. Dream Security co | Hanwha Life vs. Microfriend |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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