Correlation Between Daejung Chemicals and Wider Planet
Can any of the company-specific risk be diversified away by investing in both Daejung Chemicals and Wider Planet 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 Wider Planet 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 Wider Planet, you can compare the effects of market volatilities on Daejung Chemicals and Wider Planet 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 Wider Planet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daejung Chemicals and Wider Planet.
Diversification Opportunities for Daejung Chemicals and Wider Planet
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Daejung and Wider is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Daejung Chemicals Metals and Wider Planet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wider Planet 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 Wider Planet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wider Planet has no effect on the direction of Daejung Chemicals i.e., Daejung Chemicals and Wider Planet go up and down completely randomly.
Pair Corralation between Daejung Chemicals and Wider Planet
Assuming the 90 days trading horizon Daejung Chemicals Metals is expected to generate 0.21 times more return on investment than Wider Planet. However, Daejung Chemicals Metals is 4.78 times less risky than Wider Planet. It trades about -0.01 of its potential returns per unit of risk. Wider Planet is currently generating about -0.02 per unit of risk. If you would invest 1,330,808 in Daejung Chemicals Metals on October 24, 2024 and sell it today you would lose (23,808) from holding Daejung Chemicals Metals or give up 1.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daejung Chemicals Metals vs. Wider Planet
Performance |
| Timeline |
| Daejung Chemicals Metals |
| Wider Planet |
Daejung Chemicals and Wider Planet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daejung Chemicals and Wider Planet
The main advantage of trading using opposite Daejung Chemicals and Wider Planet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daejung Chemicals position performs unexpectedly, Wider Planet 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 Wider Planet will offset losses from the drop in Wider Planet's long position.| Daejung Chemicals vs. Youl Chon Chemical | Daejung Chemicals vs. Kukdong Oil Chemicals | Daejung Chemicals vs. Lotte Fine Chemical | Daejung Chemicals vs. Duksan Hi Metal |
| Wider Planet vs. Namhwa Industrial Co | Wider Planet vs. Bosung Power Technology | Wider Planet vs. Daejung Chemicals Metals | Wider Planet vs. Puloon Technology |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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