Correlation Between Wave Electronics and DAEDUCK ELECTRONICS
Can any of the company-specific risk be diversified away by investing in both Wave Electronics and DAEDUCK 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 Wave Electronics and DAEDUCK ELECTRONICS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wave Electronics Co and DAEDUCK ELECTRONICS CoLtd, you can compare the effects of market volatilities on Wave Electronics and DAEDUCK 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 Wave Electronics with a short position of DAEDUCK ELECTRONICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wave Electronics and DAEDUCK ELECTRONICS.
Diversification Opportunities for Wave Electronics and DAEDUCK ELECTRONICS
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wave and DAEDUCK is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Wave Electronics Co and DAEDUCK ELECTRONICS CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DAEDUCK ELECTRONICS CoLtd and Wave Electronics 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 Wave Electronics Co are associated (or correlated) with DAEDUCK ELECTRONICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DAEDUCK ELECTRONICS CoLtd has no effect on the direction of Wave Electronics i.e., Wave Electronics and DAEDUCK ELECTRONICS go up and down completely randomly.
Pair Corralation between Wave Electronics and DAEDUCK ELECTRONICS
Assuming the 90 days trading horizon Wave Electronics Co is expected to under-perform the DAEDUCK ELECTRONICS. In addition to that, Wave Electronics is 2.2 times more volatile than DAEDUCK ELECTRONICS CoLtd. It trades about -0.21 of its total potential returns per unit of risk. DAEDUCK ELECTRONICS CoLtd is currently generating about -0.02 per unit of volatility. If you would invest 818,000 in DAEDUCK ELECTRONICS CoLtd on September 4, 2024 and sell it today you would lose (8,000) from holding DAEDUCK ELECTRONICS CoLtd or give up 0.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wave Electronics Co vs. DAEDUCK ELECTRONICS CoLtd
Performance |
| Timeline |
| Wave Electronics |
| DAEDUCK ELECTRONICS CoLtd |
Wave Electronics and DAEDUCK ELECTRONICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wave Electronics and DAEDUCK ELECTRONICS
The main advantage of trading using opposite Wave Electronics and DAEDUCK ELECTRONICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wave Electronics position performs unexpectedly, DAEDUCK 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 DAEDUCK ELECTRONICS will offset losses from the drop in DAEDUCK ELECTRONICS's long position.| Wave Electronics vs. Dongsin Engineering Construction | Wave Electronics vs. Doosan Fuel Cell | Wave Electronics vs. Daishin Balance 1 | Wave Electronics 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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