Correlation Between Daewoo SBI and IQuest
Can any of the company-specific risk be diversified away by investing in both Daewoo SBI and IQuest 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 IQuest 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 IQuest Co, you can compare the effects of market volatilities on Daewoo SBI and IQuest 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 IQuest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daewoo SBI and IQuest.
Diversification Opportunities for Daewoo SBI and IQuest
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Daewoo and IQuest is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Daewoo SBI SPAC and IQuest Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IQuest 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 IQuest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IQuest has no effect on the direction of Daewoo SBI i.e., Daewoo SBI and IQuest go up and down completely randomly.
Pair Corralation between Daewoo SBI and IQuest
Assuming the 90 days trading horizon Daewoo SBI SPAC is expected to under-perform the IQuest. But the stock apears to be less risky and, when comparing its historical volatility, Daewoo SBI SPAC is 1.95 times less risky than IQuest. The stock trades about -0.17 of its potential returns per unit of risk. The IQuest Co is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 281,500 in IQuest Co on September 2, 2024 and sell it today you would lose (44,000) from holding IQuest Co or give up 15.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daewoo SBI SPAC vs. IQuest Co
Performance |
| Timeline |
| Daewoo SBI SPAC |
| IQuest |
Daewoo SBI and IQuest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daewoo SBI and IQuest
The main advantage of trading using opposite Daewoo SBI and IQuest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daewoo SBI position performs unexpectedly, IQuest 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 IQuest will offset losses from the drop in IQuest'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 |
| IQuest vs. Korea Steel Co | IQuest vs. Hankook Steel Co | IQuest vs. Wonil Special Steel | IQuest vs. Jeil Steel Mfg |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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