Correlation Between Cheryong Industrial and DSC Investment
Can any of the company-specific risk be diversified away by investing in both Cheryong Industrial and DSC Investment 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 Cheryong Industrial and DSC Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cheryong Industrial CoLtd and DSC Investment, you can compare the effects of market volatilities on Cheryong Industrial and DSC Investment 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 Cheryong Industrial with a short position of DSC Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheryong Industrial and DSC Investment.
Diversification Opportunities for Cheryong Industrial and DSC Investment
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cheryong and DSC is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Cheryong Industrial CoLtd and DSC Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DSC Investment and Cheryong Industrial 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 Cheryong Industrial CoLtd are associated (or correlated) with DSC Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DSC Investment has no effect on the direction of Cheryong Industrial i.e., Cheryong Industrial and DSC Investment go up and down completely randomly.
Pair Corralation between Cheryong Industrial and DSC Investment
Assuming the 90 days trading horizon Cheryong Industrial CoLtd is expected to generate 1.64 times more return on investment than DSC Investment. However, Cheryong Industrial is 1.64 times more volatile than DSC Investment. It trades about 0.04 of its potential returns per unit of risk. DSC Investment is currently generating about -0.03 per unit of risk. If you would invest 327,522 in Cheryong Industrial CoLtd on September 1, 2024 and sell it today you would earn a total of 186,478 from holding Cheryong Industrial CoLtd or generate 56.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cheryong Industrial CoLtd vs. DSC Investment
Performance |
| Timeline |
| Cheryong Industrial CoLtd |
| DSC Investment |
Cheryong Industrial and DSC Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cheryong Industrial and DSC Investment
The main advantage of trading using opposite Cheryong Industrial and DSC Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheryong Industrial position performs unexpectedly, DSC Investment 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 DSC Investment will offset losses from the drop in DSC Investment's long position.| Cheryong Industrial vs. Nature and Environment | Cheryong Industrial vs. Busan Industrial Co | Cheryong Industrial vs. Busan Ind | Cheryong Industrial vs. Mirae Asset Daewoo |
| DSC Investment vs. Hanwha InvestmentSecurities Co | DSC Investment vs. Solution Advanced Technology | DSC Investment vs. Busan Industrial Co | DSC Investment vs. Busan Ind |
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 Stocks Directory module to find actively traded stocks across global markets.
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