Correlation Between Daejung Chemicals and Pharmicell
Can any of the company-specific risk be diversified away by investing in both Daejung Chemicals and Pharmicell 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 Pharmicell 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 Pharmicell, you can compare the effects of market volatilities on Daejung Chemicals and Pharmicell 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 Pharmicell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daejung Chemicals and Pharmicell.
Diversification Opportunities for Daejung Chemicals and Pharmicell
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Daejung and Pharmicell is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Daejung Chemicals Metals and Pharmicell in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pharmicell 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 Pharmicell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pharmicell has no effect on the direction of Daejung Chemicals i.e., Daejung Chemicals and Pharmicell go up and down completely randomly.
Pair Corralation between Daejung Chemicals and Pharmicell
Assuming the 90 days trading horizon Daejung Chemicals is expected to generate 9.37 times less return on investment than Pharmicell. But when comparing it to its historical volatility, Daejung Chemicals Metals is 2.37 times less risky than Pharmicell. It trades about 0.1 of its potential returns per unit of risk. Pharmicell is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 485,000 in Pharmicell on October 28, 2024 and sell it today you would earn a total of 432,000 from holding Pharmicell or generate 89.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daejung Chemicals Metals vs. Pharmicell
Performance |
| Timeline |
| Daejung Chemicals Metals |
| Pharmicell |
Daejung Chemicals and Pharmicell Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daejung Chemicals and Pharmicell
The main advantage of trading using opposite Daejung Chemicals and Pharmicell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daejung Chemicals position performs unexpectedly, Pharmicell 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 Pharmicell will offset losses from the drop in Pharmicell's long position.| Daejung Chemicals vs. LG Chem | Daejung Chemicals vs. Chunbo Co | Daejung Chemicals vs. DukSan Neolux CoLtd | Daejung Chemicals vs. Hyosung Chemical Corp |
| Pharmicell vs. Hanmi Semiconductor Co | Pharmicell vs. PJ Metal Co | Pharmicell vs. Industrial Bank | Pharmicell vs. Sejong Telecom |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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