Correlation Between Microfriend and DAEYANG ELECTRICCoLtd
Can any of the company-specific risk be diversified away by investing in both Microfriend and DAEYANG ELECTRICCoLtd 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 Microfriend and DAEYANG ELECTRICCoLtd into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microfriend and DAEYANG ELECTRICCoLtd, you can compare the effects of market volatilities on Microfriend and DAEYANG ELECTRICCoLtd 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 Microfriend with a short position of DAEYANG ELECTRICCoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microfriend and DAEYANG ELECTRICCoLtd.
Diversification Opportunities for Microfriend and DAEYANG ELECTRICCoLtd
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microfriend and DAEYANG is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Microfriend and DAEYANG ELECTRICCoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DAEYANG ELECTRICCoLtd and Microfriend 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 Microfriend are associated (or correlated) with DAEYANG ELECTRICCoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DAEYANG ELECTRICCoLtd has no effect on the direction of Microfriend i.e., Microfriend and DAEYANG ELECTRICCoLtd go up and down completely randomly.
Pair Corralation between Microfriend and DAEYANG ELECTRICCoLtd
Assuming the 90 days trading horizon Microfriend is expected to under-perform the DAEYANG ELECTRICCoLtd. In addition to that, Microfriend is 1.19 times more volatile than DAEYANG ELECTRICCoLtd. It trades about -0.18 of its total potential returns per unit of risk. DAEYANG ELECTRICCoLtd is currently generating about -0.08 per unit of volatility. If you would invest 1,284,000 in DAEYANG ELECTRICCoLtd on September 12, 2024 and sell it today you would lose (82,000) from holding DAEYANG ELECTRICCoLtd or give up 6.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microfriend vs. DAEYANG ELECTRICCoLtd
Performance |
| Timeline |
| Microfriend |
| DAEYANG ELECTRICCoLtd |
Microfriend and DAEYANG ELECTRICCoLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microfriend and DAEYANG ELECTRICCoLtd
The main advantage of trading using opposite Microfriend and DAEYANG ELECTRICCoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microfriend position performs unexpectedly, DAEYANG ELECTRICCoLtd 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 DAEYANG ELECTRICCoLtd will offset losses from the drop in DAEYANG ELECTRICCoLtd's long position.| Microfriend vs. Hansol Chemical Co | Microfriend vs. Kukdo Chemical Co | Microfriend vs. Jinro Distillers Co | Microfriend vs. InnoTherapy |
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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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