Correlation Between Haitai Confectionery and Daejung Chemicals
Can any of the company-specific risk be diversified away by investing in both Haitai Confectionery 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 Haitai Confectionery and Daejung Chemicals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Haitai Confectionery Foods and Daejung Chemicals Metals, you can compare the effects of market volatilities on Haitai Confectionery 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 Haitai Confectionery with a short position of Daejung Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Haitai Confectionery and Daejung Chemicals.
Diversification Opportunities for Haitai Confectionery and Daejung Chemicals
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Haitai and Daejung is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Haitai Confectionery Foods 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 Haitai Confectionery 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 Haitai Confectionery Foods 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 Haitai Confectionery i.e., Haitai Confectionery and Daejung Chemicals go up and down completely randomly.
Pair Corralation between Haitai Confectionery and Daejung Chemicals
Assuming the 90 days trading horizon Haitai Confectionery Foods is expected to generate 1.1 times more return on investment than Daejung Chemicals. However, Haitai Confectionery is 1.1 times more volatile than Daejung Chemicals Metals. It trades about 0.06 of its potential returns per unit of risk. Daejung Chemicals Metals is currently generating about -0.03 per unit of risk. If you would invest 581,000 in Haitai Confectionery Foods on September 12, 2024 and sell it today you would earn a total of 16,000 from holding Haitai Confectionery Foods or generate 2.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Haitai Confectionery Foods vs. Daejung Chemicals Metals
Performance |
| Timeline |
| Haitai Confectionery |
| Daejung Chemicals Metals |
Haitai Confectionery and Daejung Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Haitai Confectionery and Daejung Chemicals
The main advantage of trading using opposite Haitai Confectionery and Daejung Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Haitai Confectionery 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.| Haitai Confectionery vs. Samsung Electronics Co | Haitai Confectionery vs. Samsung Electronics Co | Haitai Confectionery vs. SK Hynix | Haitai Confectionery vs. POSCO Holdings |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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