Correlation Between Cheryong Industrial and DRGEM
Can any of the company-specific risk be diversified away by investing in both Cheryong Industrial and DRGEM 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 DRGEM 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 DRGEM, you can compare the effects of market volatilities on Cheryong Industrial and DRGEM 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 DRGEM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheryong Industrial and DRGEM.
Diversification Opportunities for Cheryong Industrial and DRGEM
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cheryong and DRGEM is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Cheryong Industrial CoLtd and DRGEM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DRGEM 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 DRGEM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DRGEM has no effect on the direction of Cheryong Industrial i.e., Cheryong Industrial and DRGEM go up and down completely randomly.
Pair Corralation between Cheryong Industrial and DRGEM
Assuming the 90 days trading horizon Cheryong Industrial CoLtd is expected to under-perform the DRGEM. In addition to that, Cheryong Industrial is 1.05 times more volatile than DRGEM. It trades about -0.27 of its total potential returns per unit of risk. DRGEM is currently generating about -0.05 per unit of volatility. If you would invest 670,000 in DRGEM on September 3, 2024 and sell it today you would lose (31,000) from holding DRGEM or give up 4.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cheryong Industrial CoLtd vs. DRGEM
Performance |
| Timeline |
| Cheryong Industrial CoLtd |
| DRGEM |
Cheryong Industrial and DRGEM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cheryong Industrial and DRGEM
The main advantage of trading using opposite Cheryong Industrial and DRGEM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheryong Industrial position performs unexpectedly, DRGEM 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 DRGEM will offset losses from the drop in DRGEM's long position.| Cheryong Industrial vs. SEOJEON ELECTRIC MACHINERY | Cheryong Industrial vs. NH Investment Securities | Cheryong Industrial vs. Keyang Electric Machinery | Cheryong Industrial vs. Atinum Investment Co |
| DRGEM vs. Namhwa Industrial Co | DRGEM vs. Jeong Moon Information | DRGEM vs. Tway Air Co | DRGEM vs. Daiyang Metal 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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