Correlation Between Kolon Life and Daihan Pharmaceutical
Can any of the company-specific risk be diversified away by investing in both Kolon Life and Daihan Pharmaceutical 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 Kolon Life and Daihan Pharmaceutical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kolon Life Science and Daihan Pharmaceutical CoLtd, you can compare the effects of market volatilities on Kolon Life and Daihan Pharmaceutical 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 Kolon Life with a short position of Daihan Pharmaceutical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kolon Life and Daihan Pharmaceutical.
Diversification Opportunities for Kolon Life and Daihan Pharmaceutical
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kolon and Daihan is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Kolon Life Science and Daihan Pharmaceutical CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daihan Pharmaceutical and Kolon Life 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 Kolon Life Science are associated (or correlated) with Daihan Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daihan Pharmaceutical has no effect on the direction of Kolon Life i.e., Kolon Life and Daihan Pharmaceutical go up and down completely randomly.
Pair Corralation between Kolon Life and Daihan Pharmaceutical
Assuming the 90 days trading horizon Kolon Life Science is expected to under-perform the Daihan Pharmaceutical. In addition to that, Kolon Life is 3.06 times more volatile than Daihan Pharmaceutical CoLtd. It trades about -0.04 of its total potential returns per unit of risk. Daihan Pharmaceutical CoLtd is currently generating about 0.0 per unit of volatility. If you would invest 2,676,279 in Daihan Pharmaceutical CoLtd on August 28, 2024 and sell it today you would lose (31,279) from holding Daihan Pharmaceutical CoLtd or give up 1.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kolon Life Science vs. Daihan Pharmaceutical CoLtd
Performance |
| Timeline |
| Kolon Life Science |
| Daihan Pharmaceutical |
Kolon Life and Daihan Pharmaceutical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kolon Life and Daihan Pharmaceutical
The main advantage of trading using opposite Kolon Life and Daihan Pharmaceutical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kolon Life position performs unexpectedly, Daihan Pharmaceutical 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 Daihan Pharmaceutical will offset losses from the drop in Daihan Pharmaceutical's long position.| Kolon Life vs. Aminologics CoLtd | Kolon Life vs. Withuspharmaceutical CoLtd | Kolon Life vs. High Tech Pharm |
| Daihan Pharmaceutical vs. Kolon Life Science | Daihan Pharmaceutical vs. Aminologics CoLtd | Daihan Pharmaceutical vs. Withuspharmaceutical CoLtd | Daihan Pharmaceutical vs. High Tech Pharm |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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