Correlation Between Daejung Chemicals and Kaonmedia
Can any of the company-specific risk be diversified away by investing in both Daejung Chemicals and Kaonmedia 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 Kaonmedia 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 Kaonmedia Co, you can compare the effects of market volatilities on Daejung Chemicals and Kaonmedia 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 Kaonmedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daejung Chemicals and Kaonmedia.
Diversification Opportunities for Daejung Chemicals and Kaonmedia
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Daejung and Kaonmedia is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Daejung Chemicals Metals and Kaonmedia Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaonmedia 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 Kaonmedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaonmedia has no effect on the direction of Daejung Chemicals i.e., Daejung Chemicals and Kaonmedia go up and down completely randomly.
Pair Corralation between Daejung Chemicals and Kaonmedia
Assuming the 90 days trading horizon Daejung Chemicals Metals is expected to generate 0.37 times more return on investment than Kaonmedia. However, Daejung Chemicals Metals is 2.67 times less risky than Kaonmedia. It trades about -0.08 of its potential returns per unit of risk. Kaonmedia Co is currently generating about -0.03 per unit of risk. If you would invest 1,668,066 in Daejung Chemicals Metals on September 2, 2024 and sell it today you would lose (407,066) from holding Daejung Chemicals Metals or give up 24.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daejung Chemicals Metals vs. Kaonmedia Co
Performance |
| Timeline |
| Daejung Chemicals Metals |
| Kaonmedia |
Daejung Chemicals and Kaonmedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daejung Chemicals and Kaonmedia
The main advantage of trading using opposite Daejung Chemicals and Kaonmedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daejung Chemicals position performs unexpectedly, Kaonmedia 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 Kaonmedia will offset losses from the drop in Kaonmedia's long position.| Daejung Chemicals vs. Miwon Chemicals Co | Daejung Chemicals vs. Display Tech Co | Daejung Chemicals vs. Sung Bo Chemicals | Daejung Chemicals vs. Iljin Display |
| Kaonmedia vs. Dongsin Engineering Construction | Kaonmedia vs. Doosan Fuel Cell | Kaonmedia vs. Daishin Balance 1 | Kaonmedia vs. Total Soft Bank |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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