Correlation Between Daejung Chemicals and Itcen Co
Can any of the company-specific risk be diversified away by investing in both Daejung Chemicals and Itcen Co 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 Itcen Co 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 Itcen Co, you can compare the effects of market volatilities on Daejung Chemicals and Itcen Co 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 Itcen Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daejung Chemicals and Itcen Co.
Diversification Opportunities for Daejung Chemicals and Itcen Co
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Daejung and Itcen is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Daejung Chemicals Metals and Itcen Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Itcen Co 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 Itcen Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Itcen Co has no effect on the direction of Daejung Chemicals i.e., Daejung Chemicals and Itcen Co go up and down completely randomly.
Pair Corralation between Daejung Chemicals and Itcen Co
Assuming the 90 days trading horizon Daejung Chemicals Metals is expected to generate 0.47 times more return on investment than Itcen Co. However, Daejung Chemicals Metals is 2.15 times less risky than Itcen Co. It trades about 0.09 of its potential returns per unit of risk. Itcen Co is currently generating about -0.05 per unit of risk. If you would invest 1,236,164 in Daejung Chemicals Metals on September 29, 2024 and sell it today you would earn a total of 49,836 from holding Daejung Chemicals Metals or generate 4.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daejung Chemicals Metals vs. Itcen Co
Performance |
| Timeline |
| Daejung Chemicals Metals |
| Itcen Co |
Daejung Chemicals and Itcen Co Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daejung Chemicals and Itcen Co
The main advantage of trading using opposite Daejung Chemicals and Itcen Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daejung Chemicals position performs unexpectedly, Itcen Co 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 Itcen Co will offset losses from the drop in Itcen Co'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 |
| Itcen Co vs. Ssangyong Materials Corp | Itcen Co vs. Daejung Chemicals Metals | Itcen Co vs. Kbi Metal Co | Itcen Co vs. Top Material 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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