Correlation Between Daejung Chemicals and Shinhan Inverse
Can any of the company-specific risk be diversified away by investing in both Daejung Chemicals and Shinhan Inverse 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 Shinhan Inverse 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 Shinhan Inverse Copper, you can compare the effects of market volatilities on Daejung Chemicals and Shinhan Inverse 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 Shinhan Inverse. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daejung Chemicals and Shinhan Inverse.
Diversification Opportunities for Daejung Chemicals and Shinhan Inverse
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Daejung and Shinhan is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Daejung Chemicals Metals and Shinhan Inverse Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinhan Inverse Copper 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 Shinhan Inverse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinhan Inverse Copper has no effect on the direction of Daejung Chemicals i.e., Daejung Chemicals and Shinhan Inverse go up and down completely randomly.
Pair Corralation between Daejung Chemicals and Shinhan Inverse
Assuming the 90 days trading horizon Daejung Chemicals Metals is expected to generate 0.43 times more return on investment than Shinhan Inverse. However, Daejung Chemicals Metals is 2.32 times less risky than Shinhan Inverse. It trades about 0.16 of its potential returns per unit of risk. Shinhan Inverse Copper is currently generating about -0.21 per unit of risk. If you would invest 1,285,000 in Daejung Chemicals Metals on November 29, 2024 and sell it today you would earn a total of 33,000 from holding Daejung Chemicals Metals or generate 2.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daejung Chemicals Metals vs. Shinhan Inverse Copper
Performance |
| Timeline |
| Daejung Chemicals Metals |
| Shinhan Inverse Copper |
Daejung Chemicals and Shinhan Inverse Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daejung Chemicals and Shinhan Inverse
The main advantage of trading using opposite Daejung Chemicals and Shinhan Inverse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daejung Chemicals position performs unexpectedly, Shinhan Inverse 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 Shinhan Inverse will offset losses from the drop in Shinhan Inverse's long position.| Daejung Chemicals vs. Lotte Fine Chemical | Daejung Chemicals vs. Netmarble Games Corp | Daejung Chemicals vs. Seoyon Topmetal Co | Daejung Chemicals vs. Dongnam Chemical Co |
| Shinhan Inverse vs. Korea Steel Co | Shinhan Inverse vs. Hwangkum Steel Technology | Shinhan Inverse vs. Young Heung Iron | Shinhan Inverse vs. Fine Besteel 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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