Correlation Between Daejung Chemicals and Heerim Architects
Can any of the company-specific risk be diversified away by investing in both Daejung Chemicals and Heerim Architects 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 Heerim Architects 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 Heerim Architects Planners, you can compare the effects of market volatilities on Daejung Chemicals and Heerim Architects 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 Heerim Architects. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daejung Chemicals and Heerim Architects.
Diversification Opportunities for Daejung Chemicals and Heerim Architects
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Daejung and Heerim is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Daejung Chemicals Metals and Heerim Architects Planners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heerim Architects 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 Heerim Architects. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heerim Architects has no effect on the direction of Daejung Chemicals i.e., Daejung Chemicals and Heerim Architects go up and down completely randomly.
Pair Corralation between Daejung Chemicals and Heerim Architects
Assuming the 90 days trading horizon Daejung Chemicals Metals is expected to under-perform the Heerim Architects. But the stock apears to be less risky and, when comparing its historical volatility, Daejung Chemicals Metals is 2.75 times less risky than Heerim Architects. The stock trades about -0.09 of its potential returns per unit of risk. The Heerim Architects Planners is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 507,000 in Heerim Architects Planners on September 14, 2024 and sell it today you would lose (10,000) from holding Heerim Architects Planners or give up 1.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.31% |
| Values | Daily Returns |
Daejung Chemicals Metals vs. Heerim Architects Planners
Performance |
| Timeline |
| Daejung Chemicals Metals |
| Heerim Architects |
Daejung Chemicals and Heerim Architects Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daejung Chemicals and Heerim Architects
The main advantage of trading using opposite Daejung Chemicals and Heerim Architects positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daejung Chemicals position performs unexpectedly, Heerim Architects 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 Heerim Architects will offset losses from the drop in Heerim Architects' long position.| Daejung Chemicals vs. LG Chem | Daejung Chemicals vs. Chunbo Co | Daejung Chemicals vs. DukSan Neolux CoLtd | Daejung Chemicals vs. LIG ES SPAC |
| Heerim Architects vs. Sungmoon Electronics Co | Heerim Architects vs. Daejung Chemicals Metals | Heerim Architects vs. Miwon Chemicals Co | Heerim Architects vs. LG Chemicals |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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