Correlation Between Daewoo SBI and DeviceENGCOLtd
Can any of the company-specific risk be diversified away by investing in both Daewoo SBI and DeviceENGCOLtd 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 DeviceENGCOLtd 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 DeviceENGCOLtd, you can compare the effects of market volatilities on Daewoo SBI and DeviceENGCOLtd 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 DeviceENGCOLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daewoo SBI and DeviceENGCOLtd.
Diversification Opportunities for Daewoo SBI and DeviceENGCOLtd
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Daewoo and DeviceENGCOLtd is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Daewoo SBI SPAC and DeviceENGCOLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DeviceENGCOLtd 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 DeviceENGCOLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DeviceENGCOLtd has no effect on the direction of Daewoo SBI i.e., Daewoo SBI and DeviceENGCOLtd go up and down completely randomly.
Pair Corralation between Daewoo SBI and DeviceENGCOLtd
Assuming the 90 days trading horizon Daewoo SBI SPAC is expected to under-perform the DeviceENGCOLtd. But the stock apears to be less risky and, when comparing its historical volatility, Daewoo SBI SPAC is 1.08 times less risky than DeviceENGCOLtd. The stock trades about -0.06 of its potential returns per unit of risk. The DeviceENGCOLtd is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 1,451,601 in DeviceENGCOLtd on September 2, 2024 and sell it today you would lose (198,601) from holding DeviceENGCOLtd or give up 13.68% 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. DeviceENGCOLtd
Performance |
| Timeline |
| Daewoo SBI SPAC |
| DeviceENGCOLtd |
Daewoo SBI and DeviceENGCOLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daewoo SBI and DeviceENGCOLtd
The main advantage of trading using opposite Daewoo SBI and DeviceENGCOLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daewoo SBI position performs unexpectedly, DeviceENGCOLtd 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 DeviceENGCOLtd will offset losses from the drop in DeviceENGCOLtd's long position.| Daewoo SBI vs. Woori Technology Investment | Daewoo SBI vs. DB Financial Investment | Daewoo SBI vs. Hwangkum Steel Technology | Daewoo SBI vs. Orbitech Co |
| DeviceENGCOLtd vs. SK Hynix | DeviceENGCOLtd vs. LX Semicon Co | DeviceENGCOLtd vs. People Technology | DeviceENGCOLtd vs. SIMMTECH 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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