Correlation Between Daejoo Electronic and TOPMATERIAL
Can any of the company-specific risk be diversified away by investing in both Daejoo Electronic and TOPMATERIAL 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 TOPMATERIAL 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 TOPMATERIAL LTD, you can compare the effects of market volatilities on Daejoo Electronic and TOPMATERIAL 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 TOPMATERIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daejoo Electronic and TOPMATERIAL.
Diversification Opportunities for Daejoo Electronic and TOPMATERIAL
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Daejoo and TOPMATERIAL is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Daejoo Electronic Materials and TOPMATERIAL LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOPMATERIAL LTD 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 TOPMATERIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TOPMATERIAL LTD has no effect on the direction of Daejoo Electronic i.e., Daejoo Electronic and TOPMATERIAL go up and down completely randomly.
Pair Corralation between Daejoo Electronic and TOPMATERIAL
Assuming the 90 days trading horizon Daejoo Electronic Materials is expected to generate 0.92 times more return on investment than TOPMATERIAL. However, Daejoo Electronic Materials is 1.09 times less risky than TOPMATERIAL. It trades about 0.01 of its potential returns per unit of risk. TOPMATERIAL LTD is currently generating about -0.03 per unit of risk. If you would invest 9,768,357 in Daejoo Electronic Materials on August 31, 2024 and sell it today you would lose (1,458,357) from holding Daejoo Electronic Materials or give up 14.93% 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. TOPMATERIAL LTD
Performance |
| Timeline |
| Daejoo Electronic |
| TOPMATERIAL LTD |
Daejoo Electronic and TOPMATERIAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daejoo Electronic and TOPMATERIAL
The main advantage of trading using opposite Daejoo Electronic and TOPMATERIAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daejoo Electronic position performs unexpectedly, TOPMATERIAL 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 TOPMATERIAL will offset losses from the drop in TOPMATERIAL's long position.| Daejoo Electronic vs. Dongsin Engineering Construction | Daejoo Electronic vs. Doosan Fuel Cell | Daejoo Electronic vs. Daishin Balance 1 | Daejoo Electronic vs. Total Soft Bank |
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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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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