Correlation Between Daejung Chemicals and Aprogen Healthcare
Can any of the company-specific risk be diversified away by investing in both Daejung Chemicals and Aprogen Healthcare 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 Aprogen Healthcare 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 Aprogen Healthcare Games, you can compare the effects of market volatilities on Daejung Chemicals and Aprogen Healthcare 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 Aprogen Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daejung Chemicals and Aprogen Healthcare.
Diversification Opportunities for Daejung Chemicals and Aprogen Healthcare
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Daejung and Aprogen is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Daejung Chemicals Metals and Aprogen Healthcare Games in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aprogen Healthcare Games 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 Aprogen Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aprogen Healthcare Games has no effect on the direction of Daejung Chemicals i.e., Daejung Chemicals and Aprogen Healthcare go up and down completely randomly.
Pair Corralation between Daejung Chemicals and Aprogen Healthcare
Assuming the 90 days trading horizon Daejung Chemicals Metals is expected to generate 0.38 times more return on investment than Aprogen Healthcare. However, Daejung Chemicals Metals is 2.61 times less risky than Aprogen Healthcare. It trades about -0.21 of its potential returns per unit of risk. Aprogen Healthcare Games is currently generating about -0.18 per unit of risk. If you would invest 1,509,000 in Daejung Chemicals Metals on September 2, 2024 and sell it today you would lose (248,000) from holding Daejung Chemicals Metals or give up 16.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daejung Chemicals Metals vs. Aprogen Healthcare Games
Performance |
| Timeline |
| Daejung Chemicals Metals |
| Aprogen Healthcare Games |
Daejung Chemicals and Aprogen Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daejung Chemicals and Aprogen Healthcare
The main advantage of trading using opposite Daejung Chemicals and Aprogen Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daejung Chemicals position performs unexpectedly, Aprogen Healthcare 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 Aprogen Healthcare will offset losses from the drop in Aprogen Healthcare'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 |
| Aprogen Healthcare vs. Dongsin Engineering Construction | Aprogen Healthcare vs. Doosan Fuel Cell | Aprogen Healthcare vs. Daishin Balance 1 | Aprogen Healthcare 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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