Correlation Between Daejung Chemicals and RPBio
Can any of the company-specific risk be diversified away by investing in both Daejung Chemicals and RPBio 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 RPBio 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 RPBio Inc, you can compare the effects of market volatilities on Daejung Chemicals and RPBio 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 RPBio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daejung Chemicals and RPBio.
Diversification Opportunities for Daejung Chemicals and RPBio
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Daejung and RPBio is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Daejung Chemicals Metals and RPBio Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RPBio Inc 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 RPBio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RPBio Inc has no effect on the direction of Daejung Chemicals i.e., Daejung Chemicals and RPBio go up and down completely randomly.
Pair Corralation between Daejung Chemicals and RPBio
Assuming the 90 days trading horizon Daejung Chemicals Metals is expected to generate 0.54 times more return on investment than RPBio. However, Daejung Chemicals Metals is 1.86 times less risky than RPBio. It trades about -0.13 of its potential returns per unit of risk. RPBio Inc is currently generating about -0.14 per unit of risk. If you would invest 1,673,000 in Daejung Chemicals Metals on September 3, 2024 and sell it today you would lose (412,000) from holding Daejung Chemicals Metals or give up 24.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daejung Chemicals Metals vs. RPBio Inc
Performance |
| Timeline |
| Daejung Chemicals Metals |
| RPBio Inc |
Daejung Chemicals and RPBio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daejung Chemicals and RPBio
The main advantage of trading using opposite Daejung Chemicals and RPBio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daejung Chemicals position performs unexpectedly, RPBio 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 RPBio will offset losses from the drop in RPBio's long position.| Daejung Chemicals vs. LG Chem | Daejung Chemicals vs. DukSan Neolux CoLtd | Daejung Chemicals vs. Hyosung Chemical Corp | Daejung Chemicals vs. LIG ES SPAC |
| RPBio vs. PJ Metal Co | RPBio vs. Wave Electronics Co | RPBio vs. Youngsin Metal Industrial | RPBio vs. Daeduck Electronics Co |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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