Correlation Between Daejoo Electronic and Netmarble Games
Can any of the company-specific risk be diversified away by investing in both Daejoo Electronic and Netmarble Games 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 Netmarble Games 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 Netmarble Games Corp, you can compare the effects of market volatilities on Daejoo Electronic and Netmarble Games 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 Netmarble Games. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daejoo Electronic and Netmarble Games.
Diversification Opportunities for Daejoo Electronic and Netmarble Games
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Daejoo and Netmarble is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Daejoo Electronic Materials and Netmarble Games Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netmarble Games Corp 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 Netmarble Games. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Netmarble Games Corp has no effect on the direction of Daejoo Electronic i.e., Daejoo Electronic and Netmarble Games go up and down completely randomly.
Pair Corralation between Daejoo Electronic and Netmarble Games
Assuming the 90 days trading horizon Daejoo Electronic Materials is expected to generate 2.78 times more return on investment than Netmarble Games. However, Daejoo Electronic is 2.78 times more volatile than Netmarble Games Corp. It trades about 0.31 of its potential returns per unit of risk. Netmarble Games Corp is currently generating about -0.39 per unit of risk. If you would invest 7,720,000 in Daejoo Electronic Materials on October 25, 2024 and sell it today you would earn a total of 2,660,000 from holding Daejoo Electronic Materials or generate 34.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Daejoo Electronic Materials vs. Netmarble Games Corp
Performance |
| Timeline |
| Daejoo Electronic |
| Netmarble Games Corp |
Daejoo Electronic and Netmarble Games Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daejoo Electronic and Netmarble Games
The main advantage of trading using opposite Daejoo Electronic and Netmarble Games positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daejoo Electronic position performs unexpectedly, Netmarble Games 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 Netmarble Games will offset losses from the drop in Netmarble Games' long position.The idea behind Daejoo Electronic Materials and Netmarble Games Corp 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.| Netmarble Games vs. Busan Industrial Co | Netmarble Games vs. Busan Ind | Netmarble Games vs. RPBio Inc | Netmarble Games vs. Finebesteel |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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