Correlation Between Maeil Dairies and Asia Seed
Can any of the company-specific risk be diversified away by investing in both Maeil Dairies and Asia Seed 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 Maeil Dairies and Asia Seed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Maeil Dairies Co and Asia Seed CoLtd, you can compare the effects of market volatilities on Maeil Dairies and Asia Seed 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 Maeil Dairies with a short position of Asia Seed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maeil Dairies and Asia Seed.
Diversification Opportunities for Maeil Dairies and Asia Seed
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Maeil and Asia is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Maeil Dairies Co and Asia Seed CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Seed CoLtd and Maeil Dairies 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 Maeil Dairies Co are associated (or correlated) with Asia Seed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Seed CoLtd has no effect on the direction of Maeil Dairies i.e., Maeil Dairies and Asia Seed go up and down completely randomly.
Pair Corralation between Maeil Dairies and Asia Seed
Assuming the 90 days trading horizon Maeil Dairies Co is expected to generate 0.43 times more return on investment than Asia Seed. However, Maeil Dairies Co is 2.31 times less risky than Asia Seed. It trades about -0.04 of its potential returns per unit of risk. Asia Seed CoLtd is currently generating about -0.27 per unit of risk. If you would invest 3,815,000 in Maeil Dairies Co on August 29, 2024 and sell it today you would lose (35,000) from holding Maeil Dairies Co or give up 0.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Maeil Dairies Co vs. Asia Seed CoLtd
Performance |
| Timeline |
| Maeil Dairies |
| Asia Seed CoLtd |
Maeil Dairies and Asia Seed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Maeil Dairies and Asia Seed
The main advantage of trading using opposite Maeil Dairies and Asia Seed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maeil Dairies position performs unexpectedly, Asia Seed 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 Asia Seed will offset losses from the drop in Asia Seed's long position.| Maeil Dairies vs. Dongwoo Farm To | Maeil Dairies vs. Wing Yip Food | Maeil Dairies vs. Busan Industrial Co | Maeil Dairies vs. Busan Ind |
| Asia Seed vs. Union Materials Corp | Asia Seed vs. LG Household Healthcare | Asia Seed vs. National Plastic Co | Asia Seed vs. Nh Investment And |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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