Correlation Between Daesung Industrial and InfoBank
Can any of the company-specific risk be diversified away by investing in both Daesung Industrial and InfoBank 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 Daesung Industrial and InfoBank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daesung Industrial Co and InfoBank, you can compare the effects of market volatilities on Daesung Industrial and InfoBank 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 Daesung Industrial with a short position of InfoBank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daesung Industrial and InfoBank.
Diversification Opportunities for Daesung Industrial and InfoBank
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Daesung and InfoBank is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Daesung Industrial Co and InfoBank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InfoBank and Daesung Industrial 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 Daesung Industrial Co are associated (or correlated) with InfoBank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InfoBank has no effect on the direction of Daesung Industrial i.e., Daesung Industrial and InfoBank go up and down completely randomly.
Pair Corralation between Daesung Industrial and InfoBank
Assuming the 90 days trading horizon Daesung Industrial Co is not expected to generate positive returns. However, Daesung Industrial Co is 1.24 times less risky than InfoBank. It waists most of its returns potential to compensate for thr risk taken. InfoBank is generating about -0.03 per unit of risk. If you would invest 379,000 in Daesung Industrial Co on October 13, 2024 and sell it today you would lose (50,000) from holding Daesung Industrial Co or give up 13.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.77% |
| Values | Daily Returns |
Daesung Industrial Co vs. InfoBank
Performance |
| Timeline |
| Daesung Industrial |
| InfoBank |
Daesung Industrial and InfoBank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daesung Industrial and InfoBank
The main advantage of trading using opposite Daesung Industrial and InfoBank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daesung Industrial position performs unexpectedly, InfoBank 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 InfoBank will offset losses from the drop in InfoBank's long position.| Daesung Industrial vs. InfoBank | Daesung Industrial vs. Jeju Semiconductor Corp | Daesung Industrial vs. DB Insurance Co | Daesung Industrial vs. BNK Financial Group |
| InfoBank vs. Lotte Rental Co | InfoBank vs. Wave Electronics Co | InfoBank vs. KyungIn Electronics Co | InfoBank vs. Seoul Semiconductor 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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