Correlation Between SKONEC Entertainment and Daekyung Machinery
Can any of the company-specific risk be diversified away by investing in both SKONEC Entertainment and Daekyung Machinery 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 SKONEC Entertainment and Daekyung Machinery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SKONEC Entertainment Co and Daekyung Machinery Engineering, you can compare the effects of market volatilities on SKONEC Entertainment and Daekyung Machinery 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 SKONEC Entertainment with a short position of Daekyung Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of SKONEC Entertainment and Daekyung Machinery.
Diversification Opportunities for SKONEC Entertainment and Daekyung Machinery
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SKONEC and Daekyung is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding SKONEC Entertainment Co and Daekyung Machinery Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daekyung Machinery and SKONEC Entertainment 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 SKONEC Entertainment Co are associated (or correlated) with Daekyung Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daekyung Machinery has no effect on the direction of SKONEC Entertainment i.e., SKONEC Entertainment and Daekyung Machinery go up and down completely randomly.
Pair Corralation between SKONEC Entertainment and Daekyung Machinery
Assuming the 90 days trading horizon SKONEC Entertainment Co is expected to under-perform the Daekyung Machinery. But the stock apears to be less risky and, when comparing its historical volatility, SKONEC Entertainment Co is 1.24 times less risky than Daekyung Machinery. The stock trades about -0.08 of its potential returns per unit of risk. The Daekyung Machinery Engineering is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 36,600 in Daekyung Machinery Engineering on August 27, 2024 and sell it today you would earn a total of 15,900 from holding Daekyung Machinery Engineering or generate 43.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SKONEC Entertainment Co vs. Daekyung Machinery Engineering
Performance |
| Timeline |
| SKONEC Entertainment |
| Daekyung Machinery |
SKONEC Entertainment and Daekyung Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SKONEC Entertainment and Daekyung Machinery
The main advantage of trading using opposite SKONEC Entertainment and Daekyung Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SKONEC Entertainment position performs unexpectedly, Daekyung Machinery 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 Daekyung Machinery will offset losses from the drop in Daekyung Machinery's long position.| SKONEC Entertainment vs. Posco ICT | SKONEC Entertainment vs. Devsisters corporation | SKONEC Entertainment vs. Konan Technology | SKONEC Entertainment vs. Nice Information Telecommunication |
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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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