Correlation Between Daejoo Electronic and Daewoo SBI
Can any of the company-specific risk be diversified away by investing in both Daejoo Electronic and Daewoo SBI 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 Daewoo SBI 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 Daewoo SBI SPAC, you can compare the effects of market volatilities on Daejoo Electronic and Daewoo SBI 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 Daewoo SBI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daejoo Electronic and Daewoo SBI.
Diversification Opportunities for Daejoo Electronic and Daewoo SBI
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Daejoo and Daewoo is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Daejoo Electronic Materials and Daewoo SBI SPAC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daewoo SBI SPAC 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 Daewoo SBI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daewoo SBI SPAC has no effect on the direction of Daejoo Electronic i.e., Daejoo Electronic and Daewoo SBI go up and down completely randomly.
Pair Corralation between Daejoo Electronic and Daewoo SBI
Assuming the 90 days trading horizon Daejoo Electronic Materials is expected to generate 2.03 times more return on investment than Daewoo SBI. However, Daejoo Electronic is 2.03 times more volatile than Daewoo SBI SPAC. It trades about 0.02 of its potential returns per unit of risk. Daewoo SBI SPAC is currently generating about -0.06 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 Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daejoo Electronic Materials vs. Daewoo SBI SPAC
Performance |
| Timeline |
| Daejoo Electronic |
| Daewoo SBI SPAC |
Daejoo Electronic and Daewoo SBI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daejoo Electronic and Daewoo SBI
The main advantage of trading using opposite Daejoo Electronic and Daewoo SBI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daejoo Electronic position performs unexpectedly, Daewoo SBI 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 Daewoo SBI will offset losses from the drop in Daewoo SBI's long position.The idea behind Daejoo Electronic Materials and Daewoo SBI SPAC 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.| Daewoo SBI vs. Daejoo Electronic Materials | Daewoo SBI vs. Mgame Corp | Daewoo SBI vs. Kakao Games Corp | Daewoo SBI vs. Iljin Materials Co |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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