Correlation Between Ray and DHP Korea
Can any of the company-specific risk be diversified away by investing in both Ray and DHP 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 Ray and DHP Korea into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ray Co and DHP Korea Co, you can compare the effects of market volatilities on Ray and DHP 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 Ray with a short position of DHP Korea. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ray and DHP Korea.
Diversification Opportunities for Ray and DHP Korea
Poor diversification
The 3 months correlation between Ray and DHP is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Ray Co and DHP Korea Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DHP Korea and Ray 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 Ray Co are associated (or correlated) with DHP Korea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DHP Korea has no effect on the direction of Ray i.e., Ray and DHP Korea go up and down completely randomly.
Pair Corralation between Ray and DHP Korea
Assuming the 90 days trading horizon Ray Co is expected to generate 0.81 times more return on investment than DHP Korea. However, Ray Co is 1.23 times less risky than DHP Korea. It trades about 0.28 of its potential returns per unit of risk. DHP Korea Co is currently generating about 0.08 per unit of risk. If you would invest 753,000 in Ray Co on November 27, 2024 and sell it today you would earn a total of 117,000 from holding Ray Co or generate 15.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ray Co vs. DHP Korea Co
Performance |
| Timeline |
| Ray Co |
| DHP Korea |
Ray and DHP Korea Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ray and DHP Korea
The main advantage of trading using opposite Ray and DHP Korea positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ray position performs unexpectedly, DHP 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 DHP Korea will offset losses from the drop in DHP Korea's long position.| Ray vs. LG Household Healthcare | Ray vs. Samick Musical Instruments | Ray vs. NICE Information Service | Ray vs. Koryo Credit Information |
| DHP Korea vs. Formetal Co | DHP Korea vs. Visang Education | DHP Korea vs. INFINITT Healthcare Co | DHP Korea vs. Aprogen Healthcare Games |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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