Correlation Between Daejung Chemicals and Korea Information
Can any of the company-specific risk be diversified away by investing in both Daejung Chemicals and Korea 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 Korea 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 Korea Information Communications, you can compare the effects of market volatilities on Daejung Chemicals and Korea 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 Korea Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daejung Chemicals and Korea Information.
Diversification Opportunities for Daejung Chemicals and Korea Information
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Daejung and Korea is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Daejung Chemicals Metals and Korea Information Communicatio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea 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 Korea Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Information has no effect on the direction of Daejung Chemicals i.e., Daejung Chemicals and Korea Information go up and down completely randomly.
Pair Corralation between Daejung Chemicals and Korea Information
Assuming the 90 days trading horizon Daejung Chemicals Metals is expected to under-perform the Korea Information. In addition to that, Daejung Chemicals is 1.05 times more volatile than Korea Information Communications. It trades about -0.25 of its total potential returns per unit of risk. Korea Information Communications is currently generating about -0.04 per unit of volatility. If you would invest 838,000 in Korea Information Communications on August 29, 2024 and sell it today you would lose (18,000) from holding Korea Information Communications or give up 2.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daejung Chemicals Metals vs. Korea Information Communicatio
Performance |
| Timeline |
| Daejung Chemicals Metals |
| Korea Information |
Daejung Chemicals and Korea Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daejung Chemicals and Korea Information
The main advantage of trading using opposite Daejung Chemicals and Korea Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daejung Chemicals position performs unexpectedly, Korea 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 Korea Information will offset losses from the drop in Korea Information's long position.| Daejung Chemicals vs. Duksan Hi Metal | Daejung Chemicals vs. Heungkuk Metaltech CoLtd | Daejung Chemicals vs. Daiyang Metal Co | Daejung Chemicals vs. Seoul Electronics Telecom |
| Korea Information vs. Daejung Chemicals Metals | Korea Information vs. KyungIn Electronics Co | Korea Information vs. PJ Metal Co | Korea Information vs. Dongwon Metal 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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