Correlation Between Daejung Chemicals and Mgame Corp
Can any of the company-specific risk be diversified away by investing in both Daejung Chemicals and Mgame Corp 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 Mgame Corp 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 Mgame Corp, you can compare the effects of market volatilities on Daejung Chemicals and Mgame Corp 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 Mgame Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daejung Chemicals and Mgame Corp.
Diversification Opportunities for Daejung Chemicals and Mgame Corp
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Daejung and Mgame is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Daejung Chemicals Metals and Mgame Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mgame 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 Mgame Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mgame Corp has no effect on the direction of Daejung Chemicals i.e., Daejung Chemicals and Mgame Corp go up and down completely randomly.
Pair Corralation between Daejung Chemicals and Mgame Corp
Assuming the 90 days trading horizon Daejung Chemicals Metals is expected to generate 0.77 times more return on investment than Mgame Corp. However, Daejung Chemicals Metals is 1.29 times less risky than Mgame Corp. It trades about 0.27 of its potential returns per unit of risk. Mgame Corp is currently generating about -0.15 per unit of risk. If you would invest 1,241,959 in Daejung Chemicals Metals on October 12, 2024 and sell it today you would earn a total of 69,041 from holding Daejung Chemicals Metals or generate 5.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daejung Chemicals Metals vs. Mgame Corp
Performance |
| Timeline |
| Daejung Chemicals Metals |
| Mgame Corp |
Daejung Chemicals and Mgame Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daejung Chemicals and Mgame Corp
The main advantage of trading using opposite Daejung Chemicals and Mgame Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daejung Chemicals position performs unexpectedly, Mgame Corp 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 Mgame Corp will offset losses from the drop in Mgame Corp's long position.| Daejung Chemicals vs. Echomarketing CoLtd | Daejung Chemicals vs. BGF Retail Co | Daejung Chemicals vs. Alton Sports CoLtd | Daejung Chemicals vs. Cube Entertainment |
| Mgame Corp vs. Youngsin Metal Industrial | Mgame Corp vs. Daejung Chemicals Metals | Mgame Corp vs. Kukil Metal Co | Mgame Corp vs. CJ Seafood Corp |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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