Correlation Between Daejung Chemicals and Seoyon Topmetal
Can any of the company-specific risk be diversified away by investing in both Daejung Chemicals and Seoyon Topmetal 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 Seoyon Topmetal 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 Seoyon Topmetal Co, you can compare the effects of market volatilities on Daejung Chemicals and Seoyon Topmetal 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 Seoyon Topmetal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daejung Chemicals and Seoyon Topmetal.
Diversification Opportunities for Daejung Chemicals and Seoyon Topmetal
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Daejung and Seoyon is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Daejung Chemicals Metals and Seoyon Topmetal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seoyon Topmetal 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 Seoyon Topmetal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seoyon Topmetal has no effect on the direction of Daejung Chemicals i.e., Daejung Chemicals and Seoyon Topmetal go up and down completely randomly.
Pair Corralation between Daejung Chemicals and Seoyon Topmetal
Assuming the 90 days trading horizon Daejung Chemicals Metals is expected to under-perform the Seoyon Topmetal. But the stock apears to be less risky and, when comparing its historical volatility, Daejung Chemicals Metals is 1.48 times less risky than Seoyon Topmetal. The stock trades about -0.02 of its potential returns per unit of risk. The Seoyon Topmetal Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 361,000 in Seoyon Topmetal Co on November 18, 2024 and sell it today you would earn a total of 3,500 from holding Seoyon Topmetal Co or generate 0.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daejung Chemicals Metals vs. Seoyon Topmetal Co
Performance |
| Timeline |
| Daejung Chemicals Metals |
| Seoyon Topmetal |
Daejung Chemicals and Seoyon Topmetal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daejung Chemicals and Seoyon Topmetal
The main advantage of trading using opposite Daejung Chemicals and Seoyon Topmetal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daejung Chemicals position performs unexpectedly, Seoyon Topmetal 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 Seoyon Topmetal will offset losses from the drop in Seoyon Topmetal's long position.| Daejung Chemicals vs. LG Household Healthcare | Daejung Chemicals vs. Seoul Food Industrial | Daejung Chemicals vs. Samlip General Foods | Daejung Chemicals vs. TOPMATERIAL LTD |
| Seoyon Topmetal vs. E Investment Development | Seoyon Topmetal vs. LB Investment | Seoyon Topmetal vs. T3 Entertainment Co | Seoyon Topmetal vs. TJ media 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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