Correlation Between Derkwoo Electronics and Cosmecca Korea
Can any of the company-specific risk be diversified away by investing in both Derkwoo Electronics and Cosmecca 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 Derkwoo Electronics and Cosmecca Korea 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 Cosmecca Korea Co, you can compare the effects of market volatilities on Derkwoo Electronics and Cosmecca 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 Derkwoo Electronics with a short position of Cosmecca Korea. Check out your portfolio center. Please also check ongoing floating volatility patterns of Derkwoo Electronics and Cosmecca Korea.
Diversification Opportunities for Derkwoo Electronics and Cosmecca Korea
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Derkwoo and Cosmecca is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Derkwoo Electronics Co and Cosmecca Korea Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cosmecca Korea 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 Cosmecca Korea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cosmecca Korea has no effect on the direction of Derkwoo Electronics i.e., Derkwoo Electronics and Cosmecca Korea go up and down completely randomly.
Pair Corralation between Derkwoo Electronics and Cosmecca Korea
Assuming the 90 days trading horizon Derkwoo Electronics Co is expected to under-perform the Cosmecca Korea. But the stock apears to be less risky and, when comparing its historical volatility, Derkwoo Electronics Co is 1.24 times less risky than Cosmecca Korea. The stock trades about -0.01 of its potential returns per unit of risk. The Cosmecca Korea Co is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 936,000 in Cosmecca Korea Co on September 12, 2024 and sell it today you would earn a total of 4,059,000 from holding Cosmecca Korea Co or generate 433.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Derkwoo Electronics Co vs. Cosmecca Korea Co
Performance |
| Timeline |
| Derkwoo Electronics |
| Cosmecca Korea |
Derkwoo Electronics and Cosmecca Korea Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Derkwoo Electronics and Cosmecca Korea
The main advantage of trading using opposite Derkwoo Electronics and Cosmecca Korea positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Derkwoo Electronics position performs unexpectedly, Cosmecca 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 Cosmecca Korea will offset losses from the drop in Cosmecca Korea'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 |
| Cosmecca Korea vs. Samsung Electronics Co | Cosmecca Korea vs. Derkwoo Electronics Co | Cosmecca Korea vs. Shinsegae Information Communication | Cosmecca Korea vs. Daishin Information Communications |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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