Correlation Between Cheryong Industrial and DAEDUCK ELECTRONICS
Can any of the company-specific risk be diversified away by investing in both Cheryong Industrial and DAEDUCK ELECTRONICS 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 DAEDUCK ELECTRONICS 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 DAEDUCK ELECTRONICS CoLtd, you can compare the effects of market volatilities on Cheryong Industrial and DAEDUCK ELECTRONICS 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 DAEDUCK ELECTRONICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheryong Industrial and DAEDUCK ELECTRONICS.
Diversification Opportunities for Cheryong Industrial and DAEDUCK ELECTRONICS
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cheryong and DAEDUCK is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Cheryong Industrial CoLtd and DAEDUCK ELECTRONICS CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DAEDUCK ELECTRONICS CoLtd 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 DAEDUCK ELECTRONICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DAEDUCK ELECTRONICS CoLtd has no effect on the direction of Cheryong Industrial i.e., Cheryong Industrial and DAEDUCK ELECTRONICS go up and down completely randomly.
Pair Corralation between Cheryong Industrial and DAEDUCK ELECTRONICS
Assuming the 90 days trading horizon Cheryong Industrial CoLtd is expected to generate 4.08 times more return on investment than DAEDUCK ELECTRONICS. However, Cheryong Industrial is 4.08 times more volatile than DAEDUCK ELECTRONICS CoLtd. It trades about 0.02 of its potential returns per unit of risk. DAEDUCK ELECTRONICS CoLtd is currently generating about -0.04 per unit of risk. If you would invest 562,000 in Cheryong Industrial CoLtd on August 30, 2024 and sell it today you would lose (16,000) from holding Cheryong Industrial CoLtd or give up 2.85% 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. DAEDUCK ELECTRONICS CoLtd
Performance |
| Timeline |
| Cheryong Industrial CoLtd |
| DAEDUCK ELECTRONICS CoLtd |
Cheryong Industrial and DAEDUCK ELECTRONICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cheryong Industrial and DAEDUCK ELECTRONICS
The main advantage of trading using opposite Cheryong Industrial and DAEDUCK ELECTRONICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheryong Industrial position performs unexpectedly, DAEDUCK ELECTRONICS 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 DAEDUCK ELECTRONICS will offset losses from the drop in DAEDUCK ELECTRONICS's long position.The idea behind Cheryong Industrial CoLtd and DAEDUCK ELECTRONICS CoLtd 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.| DAEDUCK ELECTRONICS vs. Busan Industrial Co | DAEDUCK ELECTRONICS vs. Busan Ind | DAEDUCK ELECTRONICS vs. Shinhan WTI Futures | DAEDUCK ELECTRONICS vs. Finebesteel |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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