Correlation Between Daejung Chemicals and Guyoung Technology
Can any of the company-specific risk be diversified away by investing in both Daejung Chemicals and Guyoung Technology 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 Guyoung Technology 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 Guyoung Technology Co, you can compare the effects of market volatilities on Daejung Chemicals and Guyoung Technology 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 Guyoung Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daejung Chemicals and Guyoung Technology.
Diversification Opportunities for Daejung Chemicals and Guyoung Technology
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Daejung and Guyoung is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Daejung Chemicals Metals and Guyoung Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guyoung Technology 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 Guyoung Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guyoung Technology has no effect on the direction of Daejung Chemicals i.e., Daejung Chemicals and Guyoung Technology go up and down completely randomly.
Pair Corralation between Daejung Chemicals and Guyoung Technology
Assuming the 90 days trading horizon Daejung Chemicals Metals is expected to generate 0.69 times more return on investment than Guyoung Technology. However, Daejung Chemicals Metals is 1.44 times less risky than Guyoung Technology. It trades about -0.06 of its potential returns per unit of risk. Guyoung Technology Co is currently generating about -0.06 per unit of risk. If you would invest 1,631,952 in Daejung Chemicals Metals on August 24, 2024 and sell it today you would lose (338,952) from holding Daejung Chemicals Metals or give up 20.77% 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. Guyoung Technology Co
Performance |
| Timeline |
| Daejung Chemicals Metals |
| Guyoung Technology |
Daejung Chemicals and Guyoung Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daejung Chemicals and Guyoung Technology
The main advantage of trading using opposite Daejung Chemicals and Guyoung Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daejung Chemicals position performs unexpectedly, Guyoung Technology 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 Guyoung Technology will offset losses from the drop in Guyoung Technology's long position.| Daejung Chemicals vs. LG Chem | Daejung Chemicals vs. Chunbo Co | Daejung Chemicals vs. DukSan Neolux CoLtd | Daejung Chemicals vs. Hyosung Chemical Corp |
| Guyoung Technology vs. Busan Industrial Co | Guyoung Technology vs. Busan Ind | Guyoung Technology vs. Mirae Asset Daewoo | Guyoung Technology vs. UNISEM 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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