Correlation Between Daesung Hi and Korea Alcohol
Can any of the company-specific risk be diversified away by investing in both Daesung Hi and Korea Alcohol 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 Korea Alcohol 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 Korea Alcohol Industrial, you can compare the effects of market volatilities on Daesung Hi and Korea Alcohol 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 Korea Alcohol. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daesung Hi and Korea Alcohol.
Diversification Opportunities for Daesung Hi and Korea Alcohol
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Daesung and Korea is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Daesung Hi Tech Co and Korea Alcohol Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Alcohol Industrial 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 Korea Alcohol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Alcohol Industrial has no effect on the direction of Daesung Hi i.e., Daesung Hi and Korea Alcohol go up and down completely randomly.
Pair Corralation between Daesung Hi and Korea Alcohol
Assuming the 90 days trading horizon Daesung Hi Tech Co is expected to under-perform the Korea Alcohol. In addition to that, Daesung Hi is 2.38 times more volatile than Korea Alcohol Industrial. It trades about -0.07 of its total potential returns per unit of risk. Korea Alcohol Industrial is currently generating about -0.04 per unit of volatility. If you would invest 981,446 in Korea Alcohol Industrial on October 14, 2024 and sell it today you would lose (117,446) from holding Korea Alcohol Industrial or give up 11.97% 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. Korea Alcohol Industrial
Performance |
| Timeline |
| Daesung Hi Tech |
| Korea Alcohol Industrial |
Daesung Hi and Korea Alcohol Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daesung Hi and Korea Alcohol
The main advantage of trading using opposite Daesung Hi and Korea Alcohol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daesung Hi position performs unexpectedly, Korea Alcohol 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 Korea Alcohol will offset losses from the drop in Korea Alcohol's long position.| Daesung Hi vs. DONGKUK TED METAL | Daesung Hi vs. Eugene Technology CoLtd | Daesung Hi vs. Seers Technology | Daesung Hi vs. iNtRON Biotechnology |
| Korea Alcohol vs. Nable Communications | Korea Alcohol vs. Korea Information Communications | Korea Alcohol vs. LG Household Healthcare | Korea Alcohol vs. Nice Information Telecommunication |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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