Correlation Between Daejung Chemicals and Daewoo SBI
Can any of the company-specific risk be diversified away by investing in both Daejung Chemicals and Daewoo SBI 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 Daewoo SBI 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 Daewoo SBI SPAC, you can compare the effects of market volatilities on Daejung Chemicals and Daewoo SBI 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 Daewoo SBI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daejung Chemicals and Daewoo SBI.
Diversification Opportunities for Daejung Chemicals and Daewoo SBI
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Daejung and Daewoo is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Daejung Chemicals Metals and Daewoo SBI SPAC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daewoo SBI SPAC 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 Daewoo SBI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daewoo SBI SPAC has no effect on the direction of Daejung Chemicals i.e., Daejung Chemicals and Daewoo SBI go up and down completely randomly.
Pair Corralation between Daejung Chemicals and Daewoo SBI
Assuming the 90 days trading horizon Daejung Chemicals Metals is expected to under-perform the Daewoo SBI. But the stock apears to be less risky and, when comparing its historical volatility, Daejung Chemicals Metals is 1.45 times less risky than Daewoo SBI. The stock trades about -0.05 of its potential returns per unit of risk. The Daewoo SBI SPAC is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 363,500 in Daewoo SBI SPAC on September 14, 2024 and sell it today you would lose (63,500) from holding Daewoo SBI SPAC or give up 17.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.62% |
| Values | Daily Returns |
Daejung Chemicals Metals vs. Daewoo SBI SPAC
Performance |
| Timeline |
| Daejung Chemicals Metals |
| Daewoo SBI SPAC |
Daejung Chemicals and Daewoo SBI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daejung Chemicals and Daewoo SBI
The main advantage of trading using opposite Daejung Chemicals and Daewoo SBI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daejung Chemicals position performs unexpectedly, Daewoo SBI 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 Daewoo SBI will offset losses from the drop in Daewoo SBI's long position.| Daejung Chemicals vs. LG Chem | Daejung Chemicals vs. Chunbo Co | Daejung Chemicals vs. DukSan Neolux CoLtd | Daejung Chemicals vs. LIG ES SPAC |
| Daewoo SBI vs. DONGKUK TED METAL | Daewoo SBI vs. Daejung Chemicals Metals | Daewoo SBI vs. Digital Power Communications | Daewoo SBI vs. Dongbang Transport Logistics |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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