Correlation Between DHP Korea and Ray
Can any of the company-specific risk be diversified away by investing in both DHP Korea and Ray 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 DHP Korea and Ray into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DHP Korea Co and Ray Co, you can compare the effects of market volatilities on DHP Korea and Ray 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 DHP Korea with a short position of Ray. Check out your portfolio center. Please also check ongoing floating volatility patterns of DHP Korea and Ray.
Diversification Opportunities for DHP Korea and Ray
Very poor diversification
The 3 months correlation between DHP and Ray is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding DHP Korea Co and Ray Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ray Co and DHP Korea 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 DHP Korea Co are associated (or correlated) with Ray. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ray Co has no effect on the direction of DHP Korea i.e., DHP Korea and Ray go up and down completely randomly.
Pair Corralation between DHP Korea and Ray
Assuming the 90 days trading horizon DHP Korea Co is expected to generate 0.76 times more return on investment than Ray. However, DHP Korea Co is 1.32 times less risky than Ray. It trades about -0.36 of its potential returns per unit of risk. Ray Co is currently generating about -0.47 per unit of risk. If you would invest 651,000 in DHP Korea Co on September 3, 2024 and sell it today you would lose (116,000) from holding DHP Korea Co or give up 17.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
DHP Korea Co vs. Ray Co
Performance |
| Timeline |
| DHP Korea |
| Ray Co |
DHP Korea and Ray Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DHP Korea and Ray
The main advantage of trading using opposite DHP Korea and Ray positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DHP Korea position performs unexpectedly, Ray 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 Ray will offset losses from the drop in Ray's long position.The idea behind DHP Korea Co and Ray Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Ray vs. Wonil Special Steel | Ray vs. Korea Petro Chemical | Ray vs. JC Chemical Co | Ray vs. Namhae Chemical |
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 CEOs Directory module to screen CEOs from public companies around the world.
Other Complementary Tools
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Stocks Directory Find actively traded stocks across global markets | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |