Correlation Between Daejung Chemicals and Wing Yip
Can any of the company-specific risk be diversified away by investing in both Daejung Chemicals and Wing Yip 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 Wing Yip 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 Wing Yip Food, you can compare the effects of market volatilities on Daejung Chemicals and Wing Yip 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 Wing Yip. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daejung Chemicals and Wing Yip.
Diversification Opportunities for Daejung Chemicals and Wing Yip
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Daejung and Wing is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Daejung Chemicals Metals and Wing Yip Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wing Yip Food 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 Wing Yip. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wing Yip Food has no effect on the direction of Daejung Chemicals i.e., Daejung Chemicals and Wing Yip go up and down completely randomly.
Pair Corralation between Daejung Chemicals and Wing Yip
Assuming the 90 days trading horizon Daejung Chemicals Metals is expected to generate 0.35 times more return on investment than Wing Yip. However, Daejung Chemicals Metals is 2.84 times less risky than Wing Yip. It trades about 0.16 of its potential returns per unit of risk. Wing Yip Food is currently generating about -0.01 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 | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daejung Chemicals Metals vs. Wing Yip Food
Performance |
| Timeline |
| Daejung Chemicals Metals |
| Wing Yip Food |
Daejung Chemicals and Wing Yip Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daejung Chemicals and Wing Yip
The main advantage of trading using opposite Daejung Chemicals and Wing Yip positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daejung Chemicals position performs unexpectedly, Wing Yip 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 Wing Yip will offset losses from the drop in Wing Yip'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 |
| Wing Yip vs. Samyang Foods Co | Wing Yip vs. Sempio Foods Co | Wing Yip vs. CKH Food Health | Wing Yip vs. Infinitt Healthcare 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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