Correlation Between Daesung Hi and Sung Bo
Can any of the company-specific risk be diversified away by investing in both Daesung Hi and Sung Bo 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 Hi and Sung Bo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daesung Hi Tech Co and Sung Bo Chemicals, you can compare the effects of market volatilities on Daesung Hi and Sung Bo 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 Hi with a short position of Sung Bo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daesung Hi and Sung Bo.
Diversification Opportunities for Daesung Hi and Sung Bo
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Daesung and Sung is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Daesung Hi Tech Co and Sung Bo Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sung Bo Chemicals and Daesung Hi 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 Hi Tech Co are associated (or correlated) with Sung Bo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sung Bo Chemicals has no effect on the direction of Daesung Hi i.e., Daesung Hi and Sung Bo go up and down completely randomly.
Pair Corralation between Daesung Hi and Sung Bo
Assuming the 90 days trading horizon Daesung Hi Tech Co is expected to under-perform the Sung Bo. In addition to that, Daesung Hi is 2.25 times more volatile than Sung Bo Chemicals. It trades about -0.04 of its total potential returns per unit of risk. Sung Bo Chemicals is currently generating about -0.02 per unit of volatility. If you would invest 303,878 in Sung Bo Chemicals on September 2, 2024 and sell it today you would lose (52,378) from holding Sung Bo Chemicals or give up 17.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daesung Hi Tech Co vs. Sung Bo Chemicals
Performance |
| Timeline |
| Daesung Hi Tech |
| Sung Bo Chemicals |
Daesung Hi and Sung Bo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daesung Hi and Sung Bo
The main advantage of trading using opposite Daesung Hi and Sung Bo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daesung Hi position performs unexpectedly, Sung Bo 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 Sung Bo will offset losses from the drop in Sung Bo's long position.| Daesung Hi vs. Samsung Electronics Co | Daesung Hi vs. Samsung Electronics Co | Daesung Hi vs. LG Energy Solution | Daesung Hi vs. SK Hynix |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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