Correlation Between Daejoo Electronic and Seojin System
Can any of the company-specific risk be diversified away by investing in both Daejoo Electronic and Seojin 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 Seojin 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 Seojin System CoLtd, you can compare the effects of market volatilities on Daejoo Electronic and Seojin 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 Seojin System. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daejoo Electronic and Seojin System.
Diversification Opportunities for Daejoo Electronic and Seojin System
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Daejoo and Seojin is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Daejoo Electronic Materials and Seojin System CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seojin System CoLtd 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 Seojin System. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seojin System CoLtd has no effect on the direction of Daejoo Electronic i.e., Daejoo Electronic and Seojin System go up and down completely randomly.
Pair Corralation between Daejoo Electronic and Seojin System
Assuming the 90 days trading horizon Daejoo Electronic Materials is expected to generate 1.26 times more return on investment than Seojin System. However, Daejoo Electronic is 1.26 times more volatile than Seojin System CoLtd. It trades about 0.03 of its potential returns per unit of risk. Seojin System CoLtd is currently generating about 0.03 per unit of risk. If you would invest 9,935,001 in Daejoo Electronic Materials on November 27, 2024 and sell it today you would earn a total of 1,764,999 from holding Daejoo Electronic Materials or generate 17.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.16% |
| Values | Daily Returns |
Daejoo Electronic Materials vs. Seojin System CoLtd
Performance |
| Timeline |
| Daejoo Electronic |
| Seojin System CoLtd |
Daejoo Electronic and Seojin System Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daejoo Electronic and Seojin System
The main advantage of trading using opposite Daejoo Electronic and Seojin System positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daejoo Electronic position performs unexpectedly, Seojin 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 Seojin System will offset losses from the drop in Seojin System's long position.The idea behind Daejoo Electronic Materials and Seojin System CoLtd 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.| Seojin System vs. Alphabet Inc Class A | Seojin System vs. Mitra Energi Persada | Seojin System vs. Kmw Inc | Seojin System vs. Starbucks |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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