Correlation Between Daejung Chemicals and Green Cross
Can any of the company-specific risk be diversified away by investing in both Daejung Chemicals and Green Cross 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 Green Cross 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 Green Cross Medical, you can compare the effects of market volatilities on Daejung Chemicals and Green Cross 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 Green Cross. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daejung Chemicals and Green Cross.
Diversification Opportunities for Daejung Chemicals and Green Cross
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Daejung and Green is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Daejung Chemicals Metals and Green Cross Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green Cross Medical 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 Green Cross. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green Cross Medical has no effect on the direction of Daejung Chemicals i.e., Daejung Chemicals and Green Cross go up and down completely randomly.
Pair Corralation between Daejung Chemicals and Green Cross
Assuming the 90 days trading horizon Daejung Chemicals Metals is expected to generate 0.84 times more return on investment than Green Cross. However, Daejung Chemicals Metals is 1.2 times less risky than Green Cross. It trades about -0.26 of its potential returns per unit of risk. Green Cross Medical is currently generating about -0.29 per unit of risk. If you would invest 1,393,000 in Daejung Chemicals Metals on August 31, 2024 and sell it today you would lose (132,000) from holding Daejung Chemicals Metals or give up 9.48% 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. Green Cross Medical
Performance |
| Timeline |
| Daejung Chemicals Metals |
| Green Cross Medical |
Daejung Chemicals and Green Cross Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daejung Chemicals and Green Cross
The main advantage of trading using opposite Daejung Chemicals and Green Cross positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daejung Chemicals position performs unexpectedly, Green Cross 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 Green Cross will offset losses from the drop in Green Cross' long position.| Daejung Chemicals vs. LG Chem | Daejung Chemicals vs. Chunbo Co | Daejung Chemicals vs. Hyosung Chemical Corp | Daejung Chemicals vs. LIG ES SPAC |
| Green Cross vs. E Investment Development | Green Cross vs. Dongil Metal Co | Green Cross vs. Samsung Publishing Co | Green Cross vs. SV Investment |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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