Correlation Between Daejung Chemicals and TAEYANG
Can any of the company-specific risk be diversified away by investing in both Daejung Chemicals and TAEYANG 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 TAEYANG 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 TAEYANG, you can compare the effects of market volatilities on Daejung Chemicals and TAEYANG 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 TAEYANG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daejung Chemicals and TAEYANG.
Diversification Opportunities for Daejung Chemicals and TAEYANG
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Daejung and TAEYANG is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Daejung Chemicals Metals and TAEYANG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TAEYANG 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 TAEYANG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TAEYANG has no effect on the direction of Daejung Chemicals i.e., Daejung Chemicals and TAEYANG go up and down completely randomly.
Pair Corralation between Daejung Chemicals and TAEYANG
Assuming the 90 days trading horizon Daejung Chemicals is expected to generate 2.32 times less return on investment than TAEYANG. But when comparing it to its historical volatility, Daejung Chemicals Metals is 1.12 times less risky than TAEYANG. It trades about 0.03 of its potential returns per unit of risk. TAEYANG is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 630,000 in TAEYANG on December 10, 2024 and sell it today you would earn a total of 6,000 from holding TAEYANG or generate 0.95% 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. TAEYANG
Performance |
| Timeline |
| Daejung Chemicals Metals |
| TAEYANG |
Daejung Chemicals and TAEYANG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daejung Chemicals and TAEYANG
The main advantage of trading using opposite Daejung Chemicals and TAEYANG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daejung Chemicals position performs unexpectedly, TAEYANG 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 TAEYANG will offset losses from the drop in TAEYANG's long position.| Daejung Chemicals vs. T3 Entertainment Co | Daejung Chemicals vs. DC Media Co | Daejung Chemicals vs. MetaLabs Co | Daejung Chemicals vs. Digital Multimedia Technology |
| TAEYANG vs. Sempio Foods Co | TAEYANG vs. Samlip General Foods | TAEYANG vs. Foodnamoo | TAEYANG vs. Hankukpackage 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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