Correlation Between Daewoo SBI and ENERGYMACHINERY KOREA
Can any of the company-specific risk be diversified away by investing in both Daewoo SBI and ENERGYMACHINERY KOREA 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 ENERGYMACHINERY KOREA 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 ENERGYMACHINERY KOREA CoLtd, you can compare the effects of market volatilities on Daewoo SBI and ENERGYMACHINERY KOREA 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 ENERGYMACHINERY KOREA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daewoo SBI and ENERGYMACHINERY KOREA.
Diversification Opportunities for Daewoo SBI and ENERGYMACHINERY KOREA
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Daewoo and ENERGYMACHINERY is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Daewoo SBI SPAC and ENERGYMACHINERY KOREA CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENERGYMACHINERY KOREA 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 ENERGYMACHINERY KOREA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENERGYMACHINERY KOREA has no effect on the direction of Daewoo SBI i.e., Daewoo SBI and ENERGYMACHINERY KOREA go up and down completely randomly.
Pair Corralation between Daewoo SBI and ENERGYMACHINERY KOREA
Assuming the 90 days trading horizon Daewoo SBI SPAC is expected to under-perform the ENERGYMACHINERY KOREA. But the stock apears to be less risky and, when comparing its historical volatility, Daewoo SBI SPAC is 1.51 times less risky than ENERGYMACHINERY KOREA. The stock trades about -0.06 of its potential returns per unit of risk. The ENERGYMACHINERY KOREA CoLtd is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 310,500 in ENERGYMACHINERY KOREA CoLtd on September 3, 2024 and sell it today you would lose (128,800) from holding ENERGYMACHINERY KOREA CoLtd or give up 41.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daewoo SBI SPAC vs. ENERGYMACHINERY KOREA CoLtd
Performance |
| Timeline |
| Daewoo SBI SPAC |
| ENERGYMACHINERY KOREA |
Daewoo SBI and ENERGYMACHINERY KOREA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daewoo SBI and ENERGYMACHINERY KOREA
The main advantage of trading using opposite Daewoo SBI and ENERGYMACHINERY KOREA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daewoo SBI position performs unexpectedly, ENERGYMACHINERY KOREA 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 ENERGYMACHINERY KOREA will offset losses from the drop in ENERGYMACHINERY KOREA's long position.| Daewoo SBI vs. Daejoo Electronic Materials | Daewoo SBI vs. Mgame Corp | Daewoo SBI vs. Kakao Games Corp | Daewoo SBI vs. Iljin Materials Co |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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