Correlation Between Daewoo SBI and ISU Chemical
Can any of the company-specific risk be diversified away by investing in both Daewoo SBI and ISU Chemical 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 Daewoo SBI and ISU Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daewoo SBI SPAC and ISU Chemical Co, you can compare the effects of market volatilities on Daewoo SBI and ISU Chemical 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 Daewoo SBI with a short position of ISU Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daewoo SBI and ISU Chemical.
Diversification Opportunities for Daewoo SBI and ISU Chemical
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Daewoo and ISU is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Daewoo SBI SPAC and ISU Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ISU Chemical and Daewoo SBI 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 Daewoo SBI SPAC are associated (or correlated) with ISU Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ISU Chemical has no effect on the direction of Daewoo SBI i.e., Daewoo SBI and ISU Chemical go up and down completely randomly.
Pair Corralation between Daewoo SBI and ISU Chemical
Assuming the 90 days trading horizon Daewoo SBI SPAC is expected to generate 1.06 times more return on investment than ISU Chemical. However, Daewoo SBI is 1.06 times more volatile than ISU Chemical Co. It trades about 0.25 of its potential returns per unit of risk. ISU Chemical Co is currently generating about -0.24 per unit of risk. If you would invest 246,000 in Daewoo SBI SPAC on September 13, 2024 and sell it today you would earn a total of 54,000 from holding Daewoo SBI SPAC or generate 21.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daewoo SBI SPAC vs. ISU Chemical Co
Performance |
| Timeline |
| Daewoo SBI SPAC |
| ISU Chemical |
Daewoo SBI and ISU Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daewoo SBI and ISU Chemical
The main advantage of trading using opposite Daewoo SBI and ISU Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daewoo SBI position performs unexpectedly, ISU Chemical 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 ISU Chemical will offset losses from the drop in ISU Chemical's long position.| Daewoo SBI vs. DONGKUK TED METAL | Daewoo SBI vs. Daejung Chemicals Metals | Daewoo SBI vs. Digital Power Communications | Daewoo SBI vs. Dongbang Transport Logistics |
| ISU Chemical vs. Atinum Investment Co | ISU Chemical vs. CJ Seafood Corp | ISU Chemical vs. KTB Investment Securities | ISU Chemical vs. Daol Investment Securities |
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 CEOs Directory module to screen CEOs from public companies around the world.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |