Correlation Between ITM Semiconductor and Daejung Chemicals
Can any of the company-specific risk be diversified away by investing in both ITM Semiconductor and Daejung Chemicals 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 ITM Semiconductor and Daejung Chemicals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ITM Semiconductor Co and Daejung Chemicals Metals, you can compare the effects of market volatilities on ITM Semiconductor and Daejung Chemicals 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 ITM Semiconductor with a short position of Daejung Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of ITM Semiconductor and Daejung Chemicals.
Diversification Opportunities for ITM Semiconductor and Daejung Chemicals
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ITM and Daejung is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding ITM Semiconductor Co and Daejung Chemicals Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daejung Chemicals Metals and ITM Semiconductor 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 ITM Semiconductor Co are associated (or correlated) with Daejung Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daejung Chemicals Metals has no effect on the direction of ITM Semiconductor i.e., ITM Semiconductor and Daejung Chemicals go up and down completely randomly.
Pair Corralation between ITM Semiconductor and Daejung Chemicals
Assuming the 90 days trading horizon ITM Semiconductor Co is expected to under-perform the Daejung Chemicals. In addition to that, ITM Semiconductor is 1.32 times more volatile than Daejung Chemicals Metals. It trades about -0.12 of its total potential returns per unit of risk. Daejung Chemicals Metals is currently generating about 0.08 per unit of volatility. If you would invest 1,232,301 in Daejung Chemicals Metals on October 17, 2024 and sell it today you would earn a total of 64,699 from holding Daejung Chemicals Metals or generate 5.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ITM Semiconductor Co vs. Daejung Chemicals Metals
Performance |
| Timeline |
| ITM Semiconductor |
| Daejung Chemicals Metals |
ITM Semiconductor and Daejung Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ITM Semiconductor and Daejung Chemicals
The main advantage of trading using opposite ITM Semiconductor and Daejung Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ITM Semiconductor position performs unexpectedly, Daejung Chemicals 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 Daejung Chemicals will offset losses from the drop in Daejung Chemicals' long position.| ITM Semiconductor vs. Korea Computer | ITM Semiconductor vs. Sejong Telecom | ITM Semiconductor vs. Daiyang Metal Co | ITM Semiconductor vs. Seoul Electronics Telecom |
| Daejung Chemicals vs. Hwangkum Steel Technology | Daejung Chemicals vs. Aprogen Healthcare Games | Daejung Chemicals vs. FNSTech Co | Daejung Chemicals vs. KMH Hitech 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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