Correlation Between Daejung Chemicals and Sam Yang
Can any of the company-specific risk be diversified away by investing in both Daejung Chemicals and Sam Yang 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 Daejung Chemicals and Sam Yang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daejung Chemicals Metals and Sam Yang Foods, you can compare the effects of market volatilities on Daejung Chemicals and Sam Yang 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 Daejung Chemicals with a short position of Sam Yang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daejung Chemicals and Sam Yang.
Diversification Opportunities for Daejung Chemicals and Sam Yang
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Daejung and Sam is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Daejung Chemicals Metals and Sam Yang Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sam Yang Foods and Daejung Chemicals 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 Daejung Chemicals Metals are associated (or correlated) with Sam Yang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sam Yang Foods has no effect on the direction of Daejung Chemicals i.e., Daejung Chemicals and Sam Yang go up and down completely randomly.
Pair Corralation between Daejung Chemicals and Sam Yang
Assuming the 90 days trading horizon Daejung Chemicals Metals is expected to under-perform the Sam Yang. But the stock apears to be less risky and, when comparing its historical volatility, Daejung Chemicals Metals is 1.71 times less risky than Sam Yang. The stock trades about -0.01 of its potential returns per unit of risk. The Sam Yang Foods is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 11,100,800 in Sam Yang Foods on August 29, 2024 and sell it today you would earn a total of 40,799,200 from holding Sam Yang Foods or generate 367.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daejung Chemicals Metals vs. Sam Yang Foods
Performance |
| Timeline |
| Daejung Chemicals Metals |
| Sam Yang Foods |
Daejung Chemicals and Sam Yang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daejung Chemicals and Sam Yang
The main advantage of trading using opposite Daejung Chemicals and Sam Yang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daejung Chemicals position performs unexpectedly, Sam Yang 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 Sam Yang will offset losses from the drop in Sam Yang's long position.| Daejung Chemicals vs. Duksan Hi Metal | Daejung Chemicals vs. Heungkuk Metaltech CoLtd | Daejung Chemicals vs. Daiyang Metal Co | Daejung Chemicals vs. Seoul Electronics Telecom |
| Sam Yang vs. Daou Data Corp | Sam Yang vs. Moadata Co | Sam Yang vs. PJ Metal Co | Sam Yang vs. Daejung Chemicals Metals |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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