Correlation Between Sangshin Electronics and Daejoo Electronic
Can any of the company-specific risk be diversified away by investing in both Sangshin Electronics and Daejoo Electronic 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 Sangshin Electronics and Daejoo Electronic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sangshin Electronics Co and Daejoo Electronic Materials, you can compare the effects of market volatilities on Sangshin Electronics and Daejoo Electronic 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 Sangshin Electronics with a short position of Daejoo Electronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sangshin Electronics and Daejoo Electronic.
Diversification Opportunities for Sangshin Electronics and Daejoo Electronic
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sangshin and Daejoo is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Sangshin Electronics Co and Daejoo Electronic Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daejoo Electronic and Sangshin 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 Sangshin Electronics Co are associated (or correlated) with Daejoo Electronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daejoo Electronic has no effect on the direction of Sangshin Electronics i.e., Sangshin Electronics and Daejoo Electronic go up and down completely randomly.
Pair Corralation between Sangshin Electronics and Daejoo Electronic
Assuming the 90 days trading horizon Sangshin Electronics Co is expected to generate 0.45 times more return on investment than Daejoo Electronic. However, Sangshin Electronics Co is 2.23 times less risky than Daejoo Electronic. It trades about -0.1 of its potential returns per unit of risk. Daejoo Electronic Materials is currently generating about -0.06 per unit of risk. If you would invest 327,000 in Sangshin Electronics Co on August 28, 2024 and sell it today you would lose (35,000) from holding Sangshin Electronics Co or give up 10.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sangshin Electronics Co vs. Daejoo Electronic Materials
Performance |
| Timeline |
| Sangshin Electronics |
| Daejoo Electronic |
Sangshin Electronics and Daejoo Electronic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sangshin Electronics and Daejoo Electronic
The main advantage of trading using opposite Sangshin Electronics and Daejoo Electronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sangshin Electronics position performs unexpectedly, Daejoo Electronic 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 Daejoo Electronic will offset losses from the drop in Daejoo Electronic's long position.| Sangshin Electronics vs. Daejoo Electronic Materials | Sangshin Electronics vs. Parksystems Corp | Sangshin Electronics vs. BH Co | Sangshin Electronics vs. Partron Co |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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