Correlation Between Humax and Daou Data
Can any of the company-specific risk be diversified away by investing in both Humax and Daou Data 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 Humax and Daou Data into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Humax Co and Daou Data Corp, you can compare the effects of market volatilities on Humax and Daou Data 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 Humax with a short position of Daou Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Humax and Daou Data.
Diversification Opportunities for Humax and Daou Data
Very poor diversification
The 3 months correlation between Humax and Daou is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Humax Co and Daou Data Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daou Data Corp and Humax 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 Humax Co are associated (or correlated) with Daou Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daou Data Corp has no effect on the direction of Humax i.e., Humax and Daou Data go up and down completely randomly.
Pair Corralation between Humax and Daou Data
Assuming the 90 days trading horizon Humax Co is expected to generate 2.21 times more return on investment than Daou Data. However, Humax is 2.21 times more volatile than Daou Data Corp. It trades about 0.27 of its potential returns per unit of risk. Daou Data Corp is currently generating about -0.01 per unit of risk. If you would invest 101,600 in Humax Co on October 7, 2024 and sell it today you would earn a total of 25,500 from holding Humax Co or generate 25.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Humax Co vs. Daou Data Corp
Performance |
| Timeline |
| Humax |
| Daou Data Corp |
Humax and Daou Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Humax and Daou Data
The main advantage of trading using opposite Humax and Daou Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Humax position performs unexpectedly, Daou Data 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 Daou Data will offset losses from the drop in Daou Data's long position.The idea behind Humax Co and Daou Data Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Daou Data vs. Hana Financial | Daou Data vs. Woori Financial Group | Daou Data vs. Samsung Electronics Co | Daou Data vs. Samsung Electronics 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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