Correlation Between Daejung Chemicals and Ssangyong Materials
Can any of the company-specific risk be diversified away by investing in both Daejung Chemicals and Ssangyong Materials 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 Ssangyong Materials 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 Ssangyong Materials Corp, you can compare the effects of market volatilities on Daejung Chemicals and Ssangyong Materials 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 Ssangyong Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daejung Chemicals and Ssangyong Materials.
Diversification Opportunities for Daejung Chemicals and Ssangyong Materials
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Daejung and Ssangyong is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Daejung Chemicals Metals and Ssangyong Materials Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ssangyong Materials Corp 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 Ssangyong Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ssangyong Materials Corp has no effect on the direction of Daejung Chemicals i.e., Daejung Chemicals and Ssangyong Materials go up and down completely randomly.
Pair Corralation between Daejung Chemicals and Ssangyong Materials
Assuming the 90 days trading horizon Daejung Chemicals Metals is expected to under-perform the Ssangyong Materials. But the stock apears to be less risky and, when comparing its historical volatility, Daejung Chemicals Metals is 2.12 times less risky than Ssangyong Materials. The stock trades about -0.24 of its potential returns per unit of risk. The Ssangyong Materials Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 232,000 in Ssangyong Materials Corp on September 5, 2024 and sell it today you would earn a total of 1,500 from holding Ssangyong Materials Corp or generate 0.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daejung Chemicals Metals vs. Ssangyong Materials Corp
Performance |
| Timeline |
| Daejung Chemicals Metals |
| Ssangyong Materials Corp |
Daejung Chemicals and Ssangyong Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daejung Chemicals and Ssangyong Materials
The main advantage of trading using opposite Daejung Chemicals and Ssangyong Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daejung Chemicals position performs unexpectedly, Ssangyong Materials 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 Ssangyong Materials will offset losses from the drop in Ssangyong Materials' long position.| Daejung Chemicals vs. LG Chem | Daejung Chemicals vs. DukSan Neolux CoLtd | Daejung Chemicals vs. Sukgyung AT Co |
| Ssangyong Materials vs. AptaBio Therapeutics | Ssangyong Materials vs. Daewoo SBI SPAC | Ssangyong Materials vs. Dream Security co | Ssangyong Materials vs. Microfriend |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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