Correlation Between Derkwoo Electronics and Ajusteel
Can any of the company-specific risk be diversified away by investing in both Derkwoo Electronics and Ajusteel 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 Derkwoo Electronics and Ajusteel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Derkwoo Electronics Co and Ajusteel Co, you can compare the effects of market volatilities on Derkwoo Electronics and Ajusteel 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 Derkwoo Electronics with a short position of Ajusteel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Derkwoo Electronics and Ajusteel.
Diversification Opportunities for Derkwoo Electronics and Ajusteel
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Derkwoo and Ajusteel is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Derkwoo Electronics Co and Ajusteel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ajusteel and Derkwoo Electronics 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 Derkwoo Electronics Co are associated (or correlated) with Ajusteel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ajusteel has no effect on the direction of Derkwoo Electronics i.e., Derkwoo Electronics and Ajusteel go up and down completely randomly.
Pair Corralation between Derkwoo Electronics and Ajusteel
Assuming the 90 days trading horizon Derkwoo Electronics Co is expected to generate 1.38 times more return on investment than Ajusteel. However, Derkwoo Electronics is 1.38 times more volatile than Ajusteel Co. It trades about -0.09 of its potential returns per unit of risk. Ajusteel Co is currently generating about -0.26 per unit of risk. If you would invest 612,000 in Derkwoo Electronics Co on August 29, 2024 and sell it today you would lose (52,000) from holding Derkwoo Electronics Co or give up 8.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Derkwoo Electronics Co vs. Ajusteel Co
Performance |
| Timeline |
| Derkwoo Electronics |
| Ajusteel |
Derkwoo Electronics and Ajusteel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Derkwoo Electronics and Ajusteel
The main advantage of trading using opposite Derkwoo Electronics and Ajusteel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Derkwoo Electronics position performs unexpectedly, Ajusteel 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 Ajusteel will offset losses from the drop in Ajusteel's long position.| Derkwoo Electronics vs. Samsung Electronics Co | Derkwoo Electronics vs. Samsung Electronics Co | Derkwoo Electronics vs. LG Energy Solution | Derkwoo Electronics vs. SK Hynix |
| Ajusteel vs. Anam Electronics Co | Ajusteel vs. Cuckoo Electronics Co | Ajusteel vs. Derkwoo Electronics Co | Ajusteel vs. Samyoung Electronics 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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