Correlation Between Daejung Chemicals and Ssangyong Information
Can any of the company-specific risk be diversified away by investing in both Daejung Chemicals and Ssangyong Information 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 Ssangyong Information 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 Ssangyong Information Communication, you can compare the effects of market volatilities on Daejung Chemicals and Ssangyong Information 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 Ssangyong Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daejung Chemicals and Ssangyong Information.
Diversification Opportunities for Daejung Chemicals and Ssangyong Information
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Daejung and Ssangyong is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Daejung Chemicals Metals and Ssangyong Information Communic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ssangyong Information 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 Ssangyong Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ssangyong Information has no effect on the direction of Daejung Chemicals i.e., Daejung Chemicals and Ssangyong Information go up and down completely randomly.
Pair Corralation between Daejung Chemicals and Ssangyong Information
Assuming the 90 days trading horizon Daejung Chemicals Metals is expected to generate 1.15 times more return on investment than Ssangyong Information. However, Daejung Chemicals is 1.15 times more volatile than Ssangyong Information Communication. It trades about -0.01 of its potential returns per unit of risk. Ssangyong Information Communication is currently generating about -0.03 per unit of risk. If you would invest 1,590,958 in Daejung Chemicals Metals on August 31, 2024 and sell it today you would lose (329,958) from holding Daejung Chemicals Metals or give up 20.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daejung Chemicals Metals vs. Ssangyong Information Communic
Performance |
| Timeline |
| Daejung Chemicals Metals |
| Ssangyong Information |
Daejung Chemicals and Ssangyong Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daejung Chemicals and Ssangyong Information
The main advantage of trading using opposite Daejung Chemicals and Ssangyong Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daejung Chemicals position performs unexpectedly, Ssangyong Information 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 Ssangyong Information will offset losses from the drop in Ssangyong Information's long position.| Daejung Chemicals vs. LG Chem | Daejung Chemicals vs. Chunbo Co | Daejung Chemicals vs. Hyosung Chemical Corp | Daejung Chemicals vs. LIG ES SPAC |
| Ssangyong Information vs. Settlebank | Ssangyong Information vs. Daishin Information Communications | Ssangyong Information vs. Busan Industrial Co | Ssangyong Information vs. Busan Ind |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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