Correlation Between Daewoo SBI and Microfriend
Can any of the company-specific risk be diversified away by investing in both Daewoo SBI and Microfriend 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 Microfriend 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 Microfriend, you can compare the effects of market volatilities on Daewoo SBI and Microfriend 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 Microfriend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daewoo SBI and Microfriend.
Diversification Opportunities for Daewoo SBI and Microfriend
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Daewoo and Microfriend is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Daewoo SBI SPAC and Microfriend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microfriend 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 Microfriend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microfriend has no effect on the direction of Daewoo SBI i.e., Daewoo SBI and Microfriend go up and down completely randomly.
Pair Corralation between Daewoo SBI and Microfriend
Assuming the 90 days trading horizon Daewoo SBI SPAC is expected to generate 0.42 times more return on investment than Microfriend. However, Daewoo SBI SPAC is 2.4 times less risky than Microfriend. It trades about -0.23 of its potential returns per unit of risk. Microfriend is currently generating about -0.25 per unit of risk. If you would invest 265,000 in Daewoo SBI SPAC on August 28, 2024 and sell it today you would lose (24,000) from holding Daewoo SBI SPAC or give up 9.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daewoo SBI SPAC vs. Microfriend
Performance |
| Timeline |
| Daewoo SBI SPAC |
| Microfriend |
Daewoo SBI and Microfriend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daewoo SBI and Microfriend
The main advantage of trading using opposite Daewoo SBI and Microfriend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daewoo SBI position performs unexpectedly, Microfriend 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 Microfriend will offset losses from the drop in Microfriend's long position.| Daewoo SBI vs. Deutsch Motors | Daewoo SBI vs. Hanjinkal | Daewoo SBI vs. Busan Industrial Co | Daewoo SBI vs. Busan Ind |
| Microfriend vs. SK Hynix | Microfriend vs. People Technology | Microfriend vs. SIMMTECH Co | Microfriend vs. Haesung DS 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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