Correlation Between JC Chemical and Daou Technology
Can any of the company-specific risk be diversified away by investing in both JC Chemical and Daou Technology 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 JC Chemical and Daou Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JC Chemical Co and Daou Technology, you can compare the effects of market volatilities on JC Chemical and Daou Technology 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 JC Chemical with a short position of Daou Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of JC Chemical and Daou Technology.
Diversification Opportunities for JC Chemical and Daou Technology
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 137950 and Daou is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding JC Chemical Co and Daou Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daou Technology and JC Chemical 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 JC Chemical Co are associated (or correlated) with Daou Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daou Technology has no effect on the direction of JC Chemical i.e., JC Chemical and Daou Technology go up and down completely randomly.
Pair Corralation between JC Chemical and Daou Technology
Assuming the 90 days trading horizon JC Chemical Co is expected to generate 1.5 times more return on investment than Daou Technology. However, JC Chemical is 1.5 times more volatile than Daou Technology. It trades about 0.11 of its potential returns per unit of risk. Daou Technology is currently generating about -0.01 per unit of risk. If you would invest 375,000 in JC Chemical Co on October 17, 2024 and sell it today you would earn a total of 14,500 from holding JC Chemical Co or generate 3.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JC Chemical Co vs. Daou Technology
Performance |
| Timeline |
| JC Chemical |
| Daou Technology |
JC Chemical and Daou Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JC Chemical and Daou Technology
The main advantage of trading using opposite JC Chemical and Daou Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JC Chemical position performs unexpectedly, Daou Technology 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 Daou Technology will offset losses from the drop in Daou Technology's long position.| JC Chemical vs. Echomarketing CoLtd | JC Chemical vs. Daejoo Electronic Materials | JC Chemical vs. KB Financial Group | JC Chemical vs. Shinil Electronics Co |
| Daou Technology vs. Dongil Metal Co | Daou Technology vs. Korean Drug Co | Daou Technology vs. Kg Chemical | Daou Technology vs. JC Chemical Co |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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