Correlation Between Daejung Chemicals and Korea Computer
Can any of the company-specific risk be diversified away by investing in both Daejung Chemicals and Korea Computer 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 Korea Computer 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 Korea Computer Terminal, you can compare the effects of market volatilities on Daejung Chemicals and Korea Computer 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 Korea Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daejung Chemicals and Korea Computer.
Diversification Opportunities for Daejung Chemicals and Korea Computer
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Daejung and Korea is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Daejung Chemicals Metals and Korea Computer Terminal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Computer Terminal 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 Korea Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Computer Terminal has no effect on the direction of Daejung Chemicals i.e., Daejung Chemicals and Korea Computer go up and down completely randomly.
Pair Corralation between Daejung Chemicals and Korea Computer
Assuming the 90 days trading horizon Daejung Chemicals Metals is expected to under-perform the Korea Computer. But the stock apears to be less risky and, when comparing its historical volatility, Daejung Chemicals Metals is 1.52 times less risky than Korea Computer. The stock trades about -0.03 of its potential returns per unit of risk. The Korea Computer Terminal is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 310,267 in Korea Computer Terminal on September 12, 2024 and sell it today you would lose (73,767) from holding Korea Computer Terminal or give up 23.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daejung Chemicals Metals vs. Korea Computer Terminal
Performance |
| Timeline |
| Daejung Chemicals Metals |
| Korea Computer Terminal |
Daejung Chemicals and Korea Computer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daejung Chemicals and Korea Computer
The main advantage of trading using opposite Daejung Chemicals and Korea Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daejung Chemicals position performs unexpectedly, Korea Computer 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 Korea Computer will offset losses from the drop in Korea Computer'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 |
| Korea Computer vs. Songwon Industrial Co | Korea Computer vs. LG Display Co | Korea Computer vs. Daejung Chemicals Metals | Korea Computer vs. Seoul Food Industrial |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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