Correlation Between Daejoo Electronic and Ace Technologies
Can any of the company-specific risk be diversified away by investing in both Daejoo Electronic and Ace Technologies 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 Ace Technologies 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 Ace Technologies Corp, you can compare the effects of market volatilities on Daejoo Electronic and Ace Technologies 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 Ace Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daejoo Electronic and Ace Technologies.
Diversification Opportunities for Daejoo Electronic and Ace Technologies
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Daejoo and Ace is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Daejoo Electronic Materials and Ace Technologies Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ace Technologies Corp 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 Ace Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ace Technologies Corp has no effect on the direction of Daejoo Electronic i.e., Daejoo Electronic and Ace Technologies go up and down completely randomly.
Pair Corralation between Daejoo Electronic and Ace Technologies
Assuming the 90 days trading horizon Daejoo Electronic Materials is expected to under-perform the Ace Technologies. In addition to that, Daejoo Electronic is 1.13 times more volatile than Ace Technologies Corp. It trades about -0.26 of its total potential returns per unit of risk. Ace Technologies Corp is currently generating about -0.23 per unit of volatility. If you would invest 98,800 in Ace Technologies Corp on August 29, 2024 and sell it today you would lose (14,800) from holding Ace Technologies Corp or give up 14.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daejoo Electronic Materials vs. Ace Technologies Corp
Performance |
| Timeline |
| Daejoo Electronic |
| Ace Technologies Corp |
Daejoo Electronic and Ace Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daejoo Electronic and Ace Technologies
The main advantage of trading using opposite Daejoo Electronic and Ace Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daejoo Electronic position performs unexpectedly, Ace Technologies 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 Ace Technologies will offset losses from the drop in Ace Technologies' long position.The idea behind Daejoo Electronic Materials and Ace Technologies Corp 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.| Ace Technologies vs. Kmw Inc | Ace Technologies vs. NH SPAC 8 | Ace Technologies vs. Daejoo Electronic Materials | Ace Technologies vs. Seojin System CoLtd |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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