Correlation Between Daejoo Electronic and Cube Entertainment
Can any of the company-specific risk be diversified away by investing in both Daejoo Electronic and Cube Entertainment 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 Cube Entertainment 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 Cube Entertainment, you can compare the effects of market volatilities on Daejoo Electronic and Cube Entertainment 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 Cube Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daejoo Electronic and Cube Entertainment.
Diversification Opportunities for Daejoo Electronic and Cube Entertainment
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Daejoo and Cube is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Daejoo Electronic Materials and Cube Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cube Entertainment 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 Cube Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cube Entertainment has no effect on the direction of Daejoo Electronic i.e., Daejoo Electronic and Cube Entertainment go up and down completely randomly.
Pair Corralation between Daejoo Electronic and Cube Entertainment
Assuming the 90 days trading horizon Daejoo Electronic Materials is expected to generate 1.09 times more return on investment than Cube Entertainment. However, Daejoo Electronic is 1.09 times more volatile than Cube Entertainment. It trades about 0.02 of its potential returns per unit of risk. Cube Entertainment is currently generating about 0.01 per unit of risk. If you would invest 7,839,784 in Daejoo Electronic Materials on September 3, 2024 and sell it today you would earn a total of 470,216 from holding Daejoo Electronic Materials or generate 6.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daejoo Electronic Materials vs. Cube Entertainment
Performance |
| Timeline |
| Daejoo Electronic |
| Cube Entertainment |
Daejoo Electronic and Cube Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daejoo Electronic and Cube Entertainment
The main advantage of trading using opposite Daejoo Electronic and Cube Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daejoo Electronic position performs unexpectedly, Cube Entertainment 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 Cube Entertainment will offset losses from the drop in Cube Entertainment's long position.The idea behind Daejoo Electronic Materials and Cube Entertainment 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.| Cube Entertainment vs. Daejoo Electronic Materials | Cube Entertainment vs. Ssangyong Materials Corp | Cube Entertainment vs. Union Materials Corp | Cube Entertainment vs. Barunson Entertainment Arts |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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