Correlation Between Hanjoo Light and Daejoo Electronic
Can any of the company-specific risk be diversified away by investing in both Hanjoo Light and Daejoo Electronic 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 Hanjoo Light and Daejoo Electronic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanjoo Light Metal and Daejoo Electronic Materials, you can compare the effects of market volatilities on Hanjoo Light and Daejoo Electronic 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 Hanjoo Light with a short position of Daejoo Electronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanjoo Light and Daejoo Electronic.
Diversification Opportunities for Hanjoo Light and Daejoo Electronic
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hanjoo and Daejoo is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Hanjoo Light Metal and Daejoo Electronic Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daejoo Electronic and Hanjoo Light 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 Hanjoo Light Metal are associated (or correlated) with Daejoo Electronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daejoo Electronic has no effect on the direction of Hanjoo Light i.e., Hanjoo Light and Daejoo Electronic go up and down completely randomly.
Pair Corralation between Hanjoo Light and Daejoo Electronic
Assuming the 90 days trading horizon Hanjoo Light Metal is expected to under-perform the Daejoo Electronic. But the stock apears to be less risky and, when comparing its historical volatility, Hanjoo Light Metal is 1.49 times less risky than Daejoo Electronic. The stock trades about -0.35 of its potential returns per unit of risk. The Daejoo Electronic Materials is currently generating about -0.21 of returns per unit of risk over similar time horizon. If you would invest 10,350,000 in Daejoo Electronic Materials on August 25, 2024 and sell it today you would lose (1,630,000) from holding Daejoo Electronic Materials or give up 15.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Hanjoo Light Metal vs. Daejoo Electronic Materials
Performance |
| Timeline |
| Hanjoo Light Metal |
| Daejoo Electronic |
Hanjoo Light and Daejoo Electronic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanjoo Light and Daejoo Electronic
The main advantage of trading using opposite Hanjoo Light and Daejoo Electronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanjoo Light position performs unexpectedly, Daejoo Electronic 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 Daejoo Electronic will offset losses from the drop in Daejoo Electronic's long position.| Hanjoo Light vs. Jeju Air Co | Hanjoo Light vs. Bohae Brewery | Hanjoo Light vs. InfoBank | Hanjoo Light vs. Lotte Non Life Insurance |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |