Correlation Between Daesung Hi and STI
Can any of the company-specific risk be diversified away by investing in both Daesung Hi and STI 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 STI 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 STI Co, you can compare the effects of market volatilities on Daesung Hi and STI 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 STI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daesung Hi and STI.
Diversification Opportunities for Daesung Hi and STI
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Daesung and STI is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Daesung Hi Tech Co and STI Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STI Co 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 STI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STI Co has no effect on the direction of Daesung Hi i.e., Daesung Hi and STI go up and down completely randomly.
Pair Corralation between Daesung Hi and STI
Assuming the 90 days trading horizon Daesung Hi Tech Co is expected to generate 0.48 times more return on investment than STI. However, Daesung Hi Tech Co is 2.06 times less risky than STI. It trades about -0.24 of its potential returns per unit of risk. STI Co is currently generating about -0.51 per unit of risk. If you would invest 401,500 in Daesung Hi Tech Co on September 2, 2024 and sell it today you would lose (33,000) from holding Daesung Hi Tech Co or give up 8.22% 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. STI Co
Performance |
| Timeline |
| Daesung Hi Tech |
| STI Co |
Daesung Hi and STI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daesung Hi and STI
The main advantage of trading using opposite Daesung Hi and STI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daesung Hi position performs unexpectedly, STI 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 STI will offset losses from the drop in STI'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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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