Correlation Between Daejoo Electronic and HyVision System
Can any of the company-specific risk be diversified away by investing in both Daejoo Electronic and HyVision System 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 HyVision System 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 HyVision System, you can compare the effects of market volatilities on Daejoo Electronic and HyVision System 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 HyVision System. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daejoo Electronic and HyVision System.
Diversification Opportunities for Daejoo Electronic and HyVision System
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Daejoo and HyVision is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Daejoo Electronic Materials and HyVision System in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HyVision System 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 HyVision System. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HyVision System has no effect on the direction of Daejoo Electronic i.e., Daejoo Electronic and HyVision System go up and down completely randomly.
Pair Corralation between Daejoo Electronic and HyVision System
Assuming the 90 days trading horizon Daejoo Electronic Materials is expected to under-perform the HyVision System. In addition to that, Daejoo Electronic is 1.02 times more volatile than HyVision System. It trades about -0.36 of its total potential returns per unit of risk. HyVision System is currently generating about -0.09 per unit of volatility. If you would invest 1,719,000 in HyVision System on September 3, 2024 and sell it today you would lose (120,000) from holding HyVision System or give up 6.98% 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. HyVision System
Performance |
| Timeline |
| Daejoo Electronic |
| HyVision System |
Daejoo Electronic and HyVision System Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daejoo Electronic and HyVision System
The main advantage of trading using opposite Daejoo Electronic and HyVision System positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daejoo Electronic position performs unexpectedly, HyVision System 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 HyVision System will offset losses from the drop in HyVision System's long position.The idea behind Daejoo Electronic Materials and HyVision System 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.| HyVision System vs. Chorokbaem Healthcare Co | HyVision System vs. KyungIn Electronics Co | HyVision System vs. Daejoo Electronic Materials | HyVision System vs. LG Household Healthcare |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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