Correlation Between Daejung Chemicals and Sinil Pharmaceutical
Can any of the company-specific risk be diversified away by investing in both Daejung Chemicals and Sinil Pharmaceutical 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 Sinil Pharmaceutical 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 Sinil Pharmaceutical Co, you can compare the effects of market volatilities on Daejung Chemicals and Sinil Pharmaceutical 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 Sinil Pharmaceutical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daejung Chemicals and Sinil Pharmaceutical.
Diversification Opportunities for Daejung Chemicals and Sinil Pharmaceutical
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Daejung and Sinil is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Daejung Chemicals Metals and Sinil Pharmaceutical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinil Pharmaceutical 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 Sinil Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinil Pharmaceutical has no effect on the direction of Daejung Chemicals i.e., Daejung Chemicals and Sinil Pharmaceutical go up and down completely randomly.
Pair Corralation between Daejung Chemicals and Sinil Pharmaceutical
Assuming the 90 days trading horizon Daejung Chemicals Metals is expected to under-perform the Sinil Pharmaceutical. But the stock apears to be less risky and, when comparing its historical volatility, Daejung Chemicals Metals is 1.19 times less risky than Sinil Pharmaceutical. The stock trades about -0.12 of its potential returns per unit of risk. The Sinil Pharmaceutical Co is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 723,000 in Sinil Pharmaceutical Co on September 13, 2024 and sell it today you would lose (83,000) from holding Sinil Pharmaceutical Co or give up 11.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.18% |
| Values | Daily Returns |
Daejung Chemicals Metals vs. Sinil Pharmaceutical Co
Performance |
| Timeline |
| Daejung Chemicals Metals |
| Sinil Pharmaceutical |
Daejung Chemicals and Sinil Pharmaceutical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daejung Chemicals and Sinil Pharmaceutical
The main advantage of trading using opposite Daejung Chemicals and Sinil Pharmaceutical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daejung Chemicals position performs unexpectedly, Sinil Pharmaceutical 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 Sinil Pharmaceutical will offset losses from the drop in Sinil Pharmaceutical's long position.| Daejung Chemicals vs. LG Chem | Daejung Chemicals vs. Chunbo Co | Daejung Chemicals vs. DukSan Neolux CoLtd | Daejung Chemicals vs. LIG ES SPAC |
| Sinil Pharmaceutical vs. Kolon Life Science | Sinil Pharmaceutical vs. JETEMA Co | Sinil Pharmaceutical vs. Aminologics CoLtd | Sinil Pharmaceutical vs. HLB Pharmaceutical 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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