Correlation Between Worldex Industry and Daiyang Metal
Can any of the company-specific risk be diversified away by investing in both Worldex Industry and Daiyang Metal 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 Worldex Industry and Daiyang Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Worldex Industry Trading and Daiyang Metal Co, you can compare the effects of market volatilities on Worldex Industry and Daiyang Metal 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 Worldex Industry with a short position of Daiyang Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Worldex Industry and Daiyang Metal.
Diversification Opportunities for Worldex Industry and Daiyang Metal
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Worldex and Daiyang is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Worldex Industry Trading and Daiyang Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daiyang Metal and Worldex Industry 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 Worldex Industry Trading are associated (or correlated) with Daiyang Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daiyang Metal has no effect on the direction of Worldex Industry i.e., Worldex Industry and Daiyang Metal go up and down completely randomly.
Pair Corralation between Worldex Industry and Daiyang Metal
Assuming the 90 days trading horizon Worldex Industry Trading is expected to generate 0.82 times more return on investment than Daiyang Metal. However, Worldex Industry Trading is 1.22 times less risky than Daiyang Metal. It trades about 0.09 of its potential returns per unit of risk. Daiyang Metal Co is currently generating about -0.01 per unit of risk. If you would invest 1,672,876 in Worldex Industry Trading on October 19, 2024 and sell it today you would earn a total of 61,124 from holding Worldex Industry Trading or generate 3.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Worldex Industry Trading vs. Daiyang Metal Co
Performance |
| Timeline |
| Worldex Industry Trading |
| Daiyang Metal |
Worldex Industry and Daiyang Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Worldex Industry and Daiyang Metal
The main advantage of trading using opposite Worldex Industry and Daiyang Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Worldex Industry position performs unexpectedly, Daiyang Metal 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 Daiyang Metal will offset losses from the drop in Daiyang Metal's long position.| Worldex Industry vs. WONIK Materials CoLtd | Worldex Industry vs. SS TECH | Worldex Industry vs. TES Co | Worldex Industry vs. LEENO Industrial |
| Daiyang Metal vs. Worldex Industry Trading | Daiyang Metal vs. CG Hi Tech | Daiyang Metal vs. E Investment Development | Daiyang Metal vs. Woori Technology Investment |
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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