Correlation Between Daejung Chemicals and MetaLabs
Can any of the company-specific risk be diversified away by investing in both Daejung Chemicals and MetaLabs 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 MetaLabs 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 MetaLabs Co, you can compare the effects of market volatilities on Daejung Chemicals and MetaLabs 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 MetaLabs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daejung Chemicals and MetaLabs.
Diversification Opportunities for Daejung Chemicals and MetaLabs
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Daejung and MetaLabs is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Daejung Chemicals Metals and MetaLabs Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MetaLabs 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 MetaLabs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MetaLabs has no effect on the direction of Daejung Chemicals i.e., Daejung Chemicals and MetaLabs go up and down completely randomly.
Pair Corralation between Daejung Chemicals and MetaLabs
Assuming the 90 days trading horizon Daejung Chemicals Metals is expected to generate 0.56 times more return on investment than MetaLabs. However, Daejung Chemicals Metals is 1.79 times less risky than MetaLabs. It trades about -0.01 of its potential returns per unit of risk. MetaLabs Co is currently generating about -0.02 per unit of risk. If you would invest 1,638,104 in Daejung Chemicals Metals on August 28, 2024 and sell it today you would lose (360,104) from holding Daejung Chemicals Metals or give up 21.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daejung Chemicals Metals vs. MetaLabs Co
Performance |
| Timeline |
| Daejung Chemicals Metals |
| MetaLabs |
Daejung Chemicals and MetaLabs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daejung Chemicals and MetaLabs
The main advantage of trading using opposite Daejung Chemicals and MetaLabs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daejung Chemicals position performs unexpectedly, MetaLabs 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 MetaLabs will offset losses from the drop in MetaLabs' long position.| Daejung Chemicals vs. Youngbo Chemical Co | Daejung Chemicals vs. Namhae Chemical | Daejung Chemicals vs. Youl Chon Chemical | Daejung Chemicals vs. Kukdong Oil Chemicals |
| MetaLabs vs. Busan Industrial Co | MetaLabs vs. Busan Ind | MetaLabs vs. Mirae Asset Daewoo | MetaLabs 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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