Correlation Between Daejung Chemicals and Daesung Industrial
Can any of the company-specific risk be diversified away by investing in both Daejung Chemicals and Daesung Industrial 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 Daesung Industrial 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 Daesung Industrial Co, you can compare the effects of market volatilities on Daejung Chemicals and Daesung Industrial 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 Daesung Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daejung Chemicals and Daesung Industrial.
Diversification Opportunities for Daejung Chemicals and Daesung Industrial
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Daejung and Daesung is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Daejung Chemicals Metals and Daesung Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daesung Industrial 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 Daesung Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daesung Industrial has no effect on the direction of Daejung Chemicals i.e., Daejung Chemicals and Daesung Industrial go up and down completely randomly.
Pair Corralation between Daejung Chemicals and Daesung Industrial
Assuming the 90 days trading horizon Daejung Chemicals Metals is expected to generate 0.63 times more return on investment than Daesung Industrial. However, Daejung Chemicals Metals is 1.6 times less risky than Daesung Industrial. It trades about 0.15 of its potential returns per unit of risk. Daesung Industrial Co is currently generating about -0.04 per unit of risk. If you would invest 1,288,000 in Daejung Chemicals Metals on October 29, 2024 and sell it today you would earn a total of 32,000 from holding Daejung Chemicals Metals or generate 2.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daejung Chemicals Metals vs. Daesung Industrial Co
Performance |
| Timeline |
| Daejung Chemicals Metals |
| Daesung Industrial |
Daejung Chemicals and Daesung Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daejung Chemicals and Daesung Industrial
The main advantage of trading using opposite Daejung Chemicals and Daesung Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daejung Chemicals position performs unexpectedly, Daesung Industrial 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 Daesung Industrial will offset losses from the drop in Daesung Industrial's long position.| Daejung Chemicals vs. LG Household Healthcare | Daejung Chemicals vs. Moadata Co | Daejung Chemicals vs. Korea Steel Co | Daejung Chemicals vs. Insung Information Co |
| Daesung Industrial vs. KB Financial Group | Daesung Industrial vs. Shinhan Financial Group | Daesung Industrial vs. Hana Financial | Daesung Industrial vs. Woori Financial Group |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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