Correlation Between Daejung Chemicals and Taewoong Logistics
Can any of the company-specific risk be diversified away by investing in both Daejung Chemicals and Taewoong Logistics 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 Taewoong Logistics 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 Taewoong Logistics CoLtd, you can compare the effects of market volatilities on Daejung Chemicals and Taewoong Logistics 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 Taewoong Logistics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daejung Chemicals and Taewoong Logistics.
Diversification Opportunities for Daejung Chemicals and Taewoong Logistics
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Daejung and Taewoong is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Daejung Chemicals Metals and Taewoong Logistics CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taewoong Logistics CoLtd 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 Taewoong Logistics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taewoong Logistics CoLtd has no effect on the direction of Daejung Chemicals i.e., Daejung Chemicals and Taewoong Logistics go up and down completely randomly.
Pair Corralation between Daejung Chemicals and Taewoong Logistics
Assuming the 90 days trading horizon Daejung Chemicals Metals is expected to under-perform the Taewoong Logistics. But the stock apears to be less risky and, when comparing its historical volatility, Daejung Chemicals Metals is 1.29 times less risky than Taewoong Logistics. The stock trades about -0.31 of its potential returns per unit of risk. The Taewoong Logistics CoLtd is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 300,000 in Taewoong Logistics CoLtd on September 4, 2024 and sell it today you would lose (11,500) from holding Taewoong Logistics CoLtd or give up 3.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daejung Chemicals Metals vs. Taewoong Logistics CoLtd
Performance |
| Timeline |
| Daejung Chemicals Metals |
| Taewoong Logistics CoLtd |
Daejung Chemicals and Taewoong Logistics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daejung Chemicals and Taewoong Logistics
The main advantage of trading using opposite Daejung Chemicals and Taewoong Logistics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daejung Chemicals position performs unexpectedly, Taewoong Logistics 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 Taewoong Logistics will offset losses from the drop in Taewoong Logistics' long position.| Daejung Chemicals vs. Korea Information Communications | Daejung Chemicals vs. TS Investment Corp | Daejung Chemicals vs. Daelim Trading Co | Daejung Chemicals vs. Jeju Semiconductor Corp |
| Taewoong Logistics vs. LG Uplus | Taewoong Logistics vs. ASTORY CoLtd | Taewoong Logistics vs. AnterogenCoLtd | Taewoong Logistics vs. Industrial 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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