Correlation Between Daejoo Electronic and Humax
Can any of the company-specific risk be diversified away by investing in both Daejoo Electronic and Humax 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 Humax 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 Humax Co, you can compare the effects of market volatilities on Daejoo Electronic and Humax 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 Humax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daejoo Electronic and Humax.
Diversification Opportunities for Daejoo Electronic and Humax
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Daejoo and Humax is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Daejoo Electronic Materials and Humax Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Humax 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 Humax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Humax has no effect on the direction of Daejoo Electronic i.e., Daejoo Electronic and Humax go up and down completely randomly.
Pair Corralation between Daejoo Electronic and Humax
Assuming the 90 days trading horizon Daejoo Electronic Materials is expected to generate 1.64 times more return on investment than Humax. However, Daejoo Electronic is 1.64 times more volatile than Humax Co. It trades about 0.01 of its potential returns per unit of risk. Humax Co is currently generating about -0.15 per unit of risk. If you would invest 8,969,310 in Daejoo Electronic Materials on September 12, 2024 and sell it today you would lose (609,310) from holding Daejoo Electronic Materials or give up 6.79% 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. Humax Co
Performance |
| Timeline |
| Daejoo Electronic |
| Humax |
Daejoo Electronic and Humax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daejoo Electronic and Humax
The main advantage of trading using opposite Daejoo Electronic and Humax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daejoo Electronic position performs unexpectedly, Humax 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 Humax will offset losses from the drop in Humax's long position.| Daejoo Electronic vs. Cube Entertainment | Daejoo Electronic vs. Dreamus Company | Daejoo Electronic vs. LG Energy Solution | Daejoo Electronic vs. Dongwon System |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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