Correlation Between Daesung Hi and LIG ES
Can any of the company-specific risk be diversified away by investing in both Daesung Hi and LIG ES 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 LIG ES 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 LIG ES SPAC, you can compare the effects of market volatilities on Daesung Hi and LIG ES 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 LIG ES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daesung Hi and LIG ES.
Diversification Opportunities for Daesung Hi and LIG ES
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Daesung and LIG is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Daesung Hi Tech Co and LIG ES SPAC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LIG ES SPAC 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 LIG ES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LIG ES SPAC has no effect on the direction of Daesung Hi i.e., Daesung Hi and LIG ES go up and down completely randomly.
Pair Corralation between Daesung Hi and LIG ES
Assuming the 90 days trading horizon Daesung Hi Tech Co is expected to generate 0.47 times more return on investment than LIG ES. However, Daesung Hi Tech Co is 2.11 times less risky than LIG ES. It trades about -0.3 of its potential returns per unit of risk. LIG ES SPAC is currently generating about -0.42 per unit of risk. If you would invest 408,000 in Daesung Hi Tech Co on September 4, 2024 and sell it today you would lose (40,000) from holding Daesung Hi Tech Co or give up 9.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daesung Hi Tech Co vs. LIG ES SPAC
Performance |
| Timeline |
| Daesung Hi Tech |
| LIG ES SPAC |
Daesung Hi and LIG ES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daesung Hi and LIG ES
The main advantage of trading using opposite Daesung Hi and LIG ES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daesung Hi position performs unexpectedly, LIG ES 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 LIG ES will offset losses from the drop in LIG ES'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 |
| LIG ES vs. Display Tech Co | LIG ES vs. CG Hi Tech | LIG ES vs. Daesung Hi Tech Co | LIG ES vs. Lotte Data Communication |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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