Correlation Between Daejung Chemicals and Insung Information
Can any of the company-specific risk be diversified away by investing in both Daejung Chemicals and Insung 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 Insung 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 Insung Information Co, you can compare the effects of market volatilities on Daejung Chemicals and Insung 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 Insung Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daejung Chemicals and Insung Information.
Diversification Opportunities for Daejung Chemicals and Insung Information
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Daejung and Insung is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Daejung Chemicals Metals and Insung Information Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insung 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 Insung Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insung Information has no effect on the direction of Daejung Chemicals i.e., Daejung Chemicals and Insung Information go up and down completely randomly.
Pair Corralation between Daejung Chemicals and Insung Information
Assuming the 90 days trading horizon Daejung Chemicals is expected to generate 1.84 times less return on investment than Insung Information. But when comparing it to its historical volatility, Daejung Chemicals Metals is 1.44 times less risky than Insung Information. It trades about 0.06 of its potential returns per unit of risk. Insung Information Co is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 181,200 in Insung Information Co on September 14, 2024 and sell it today you would earn a total of 8,200 from holding Insung Information Co or generate 4.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daejung Chemicals Metals vs. Insung Information Co
Performance |
| Timeline |
| Daejung Chemicals Metals |
| Insung Information |
Daejung Chemicals and Insung Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daejung Chemicals and Insung Information
The main advantage of trading using opposite Daejung Chemicals and Insung Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daejung Chemicals position performs unexpectedly, Insung 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 Insung Information will offset losses from the drop in Insung Information'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 |
| Insung Information vs. Phoenix Materials Co | Insung Information vs. WONIK Materials CoLtd | Insung Information vs. Shinhan Inverse Copper | Insung Information vs. MetaLabs 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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