Correlation Between Daejoo Electronic and Derkwoo Electronics
Can any of the company-specific risk be diversified away by investing in both Daejoo Electronic and Derkwoo Electronics 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 Derkwoo Electronics 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 Derkwoo Electronics Co, you can compare the effects of market volatilities on Daejoo Electronic and Derkwoo Electronics 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 Derkwoo Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daejoo Electronic and Derkwoo Electronics.
Diversification Opportunities for Daejoo Electronic and Derkwoo Electronics
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Daejoo and Derkwoo is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Daejoo Electronic Materials and Derkwoo Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Derkwoo Electronics 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 Derkwoo Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Derkwoo Electronics has no effect on the direction of Daejoo Electronic i.e., Daejoo Electronic and Derkwoo Electronics go up and down completely randomly.
Pair Corralation between Daejoo Electronic and Derkwoo Electronics
Assuming the 90 days trading horizon Daejoo Electronic Materials is expected to generate 1.25 times more return on investment than Derkwoo Electronics. However, Daejoo Electronic is 1.25 times more volatile than Derkwoo Electronics Co. It trades about 0.01 of its potential returns per unit of risk. Derkwoo Electronics Co is currently generating about -0.05 per unit of risk. If you would invest 10,317,700 in Daejoo Electronic Materials on August 28, 2024 and sell it today you would lose (1,217,700) from holding Daejoo Electronic Materials or give up 11.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daejoo Electronic Materials vs. Derkwoo Electronics Co
Performance |
| Timeline |
| Daejoo Electronic |
| Derkwoo Electronics |
Daejoo Electronic and Derkwoo Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daejoo Electronic and Derkwoo Electronics
The main advantage of trading using opposite Daejoo Electronic and Derkwoo Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daejoo Electronic position performs unexpectedly, Derkwoo Electronics 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 Derkwoo Electronics will offset losses from the drop in Derkwoo Electronics' long position.| Daejoo Electronic vs. Korea Real Estate | Daejoo Electronic vs. Korea Ratings Co | Daejoo Electronic vs. IQuest Co | Daejoo Electronic vs. Wonbang Tech Co |
| Derkwoo Electronics vs. Samsung Electronics Co | Derkwoo Electronics vs. Samsung Electronics Co | Derkwoo Electronics vs. LG Energy Solution | Derkwoo Electronics vs. SK Hynix |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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