Correlation Between Daejung Chemicals and SK Chemicals
Can any of the company-specific risk be diversified away by investing in both Daejung Chemicals and SK Chemicals 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 SK Chemicals 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 SK Chemicals Co, you can compare the effects of market volatilities on Daejung Chemicals and SK Chemicals 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 SK Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daejung Chemicals and SK Chemicals.
Diversification Opportunities for Daejung Chemicals and SK Chemicals
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Daejung and 285130 is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Daejung Chemicals Metals and SK Chemicals Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Chemicals 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 SK Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SK Chemicals has no effect on the direction of Daejung Chemicals i.e., Daejung Chemicals and SK Chemicals go up and down completely randomly.
Pair Corralation between Daejung Chemicals and SK Chemicals
Assuming the 90 days trading horizon Daejung Chemicals Metals is expected to under-perform the SK Chemicals. But the stock apears to be less risky and, when comparing its historical volatility, Daejung Chemicals Metals is 1.35 times less risky than SK Chemicals. The stock trades about -0.12 of its potential returns per unit of risk. The SK Chemicals Co is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 5,020,000 in SK Chemicals Co on September 13, 2024 and sell it today you would lose (520,000) from holding SK Chemicals Co or give up 10.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 97.73% |
| Values | Daily Returns |
Daejung Chemicals Metals vs. SK Chemicals Co
Performance |
| Timeline |
| Daejung Chemicals Metals |
| SK Chemicals |
Daejung Chemicals and SK Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daejung Chemicals and SK Chemicals
The main advantage of trading using opposite Daejung Chemicals and SK Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daejung Chemicals position performs unexpectedly, SK Chemicals 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 SK Chemicals will offset losses from the drop in SK Chemicals' long position.| Daejung Chemicals vs. LG Chem | Daejung Chemicals vs. Chunbo Co | Daejung Chemicals vs. DukSan Neolux CoLtd | Daejung Chemicals vs. LIG ES SPAC |
| SK Chemicals vs. LG Chemicals | SK Chemicals vs. POSCO Holdings | SK Chemicals vs. Hanwha Solutions | SK Chemicals vs. Lotte Chemical Corp |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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