Correlation Between Daejung Chemicals and Songwon Industrial
Can any of the company-specific risk be diversified away by investing in both Daejung Chemicals and Songwon Industrial 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 Songwon Industrial 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 Songwon Industrial Co, you can compare the effects of market volatilities on Daejung Chemicals and Songwon Industrial 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 Songwon Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daejung Chemicals and Songwon Industrial.
Diversification Opportunities for Daejung Chemicals and Songwon Industrial
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Daejung and Songwon is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Daejung Chemicals Metals and Songwon Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Songwon Industrial 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 Songwon Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Songwon Industrial has no effect on the direction of Daejung Chemicals i.e., Daejung Chemicals and Songwon Industrial go up and down completely randomly.
Pair Corralation between Daejung Chemicals and Songwon Industrial
Assuming the 90 days trading horizon Daejung Chemicals is expected to generate 41.39 times less return on investment than Songwon Industrial. But when comparing it to its historical volatility, Daejung Chemicals Metals is 2.94 times less risky than Songwon Industrial. It trades about 0.02 of its potential returns per unit of risk. Songwon Industrial Co is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 1,116,000 in Songwon Industrial Co on October 25, 2024 and sell it today you would earn a total of 132,000 from holding Songwon Industrial Co or generate 11.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daejung Chemicals Metals vs. Songwon Industrial Co
Performance |
| Timeline |
| Daejung Chemicals Metals |
| Songwon Industrial |
Daejung Chemicals and Songwon Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daejung Chemicals and Songwon Industrial
The main advantage of trading using opposite Daejung Chemicals and Songwon Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daejung Chemicals position performs unexpectedly, Songwon Industrial 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 Songwon Industrial will offset losses from the drop in Songwon Industrial's long position.| Daejung Chemicals vs. Automobile Pc | Daejung Chemicals vs. Korean Drug Co | Daejung Chemicals vs. TS Investment Corp | Daejung Chemicals vs. Ssangyong Information Communication |
| Songwon Industrial vs. Automobile Pc | Songwon Industrial vs. Youngsin Metal Industrial | Songwon Industrial vs. Hanjoo Light Metal | Songwon Industrial vs. Alton Sports CoLtd |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
Other Complementary Tools
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges |