Correlation Between SKONEC Entertainment and Daewoo Engineering
Can any of the company-specific risk be diversified away by investing in both SKONEC Entertainment and Daewoo Engineering 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 Daewoo Engineering 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 Daewoo Engineering Construction, you can compare the effects of market volatilities on SKONEC Entertainment and Daewoo Engineering 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 Daewoo Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of SKONEC Entertainment and Daewoo Engineering.
Diversification Opportunities for SKONEC Entertainment and Daewoo Engineering
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SKONEC and Daewoo is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding SKONEC Entertainment Co and Daewoo Engineering Constructio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daewoo Engineering 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 Daewoo Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daewoo Engineering has no effect on the direction of SKONEC Entertainment i.e., SKONEC Entertainment and Daewoo Engineering go up and down completely randomly.
Pair Corralation between SKONEC Entertainment and Daewoo Engineering
Assuming the 90 days trading horizon SKONEC Entertainment Co is expected to generate 1.79 times more return on investment than Daewoo Engineering. However, SKONEC Entertainment is 1.79 times more volatile than Daewoo Engineering Construction. It trades about 0.12 of its potential returns per unit of risk. Daewoo Engineering Construction is currently generating about -0.02 per unit of risk. If you would invest 312,000 in SKONEC Entertainment Co on November 3, 2024 and sell it today you would earn a total of 165,500 from holding SKONEC Entertainment Co or generate 53.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SKONEC Entertainment Co vs. Daewoo Engineering Constructio
Performance |
| Timeline |
| SKONEC Entertainment |
| Daewoo Engineering |
SKONEC Entertainment and Daewoo Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SKONEC Entertainment and Daewoo Engineering
The main advantage of trading using opposite SKONEC Entertainment and Daewoo Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SKONEC Entertainment position performs unexpectedly, Daewoo Engineering 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 Daewoo Engineering will offset losses from the drop in Daewoo Engineering's long position.| SKONEC Entertainment vs. DONGKUK TED METAL | SKONEC Entertainment vs. Daiyang Metal Co | SKONEC Entertainment vs. MetaLabs Co | SKONEC Entertainment vs. ABOV Semiconductor 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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