Correlation Between Hyosung Advanced and Daejung Chemicals
Can any of the company-specific risk be diversified away by investing in both Hyosung Advanced and Daejung Chemicals 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 Hyosung Advanced and Daejung Chemicals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyosung Advanced Materials and Daejung Chemicals Metals, you can compare the effects of market volatilities on Hyosung Advanced and Daejung Chemicals 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 Hyosung Advanced with a short position of Daejung Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyosung Advanced and Daejung Chemicals.
Diversification Opportunities for Hyosung Advanced and Daejung Chemicals
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hyosung and Daejung is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Hyosung Advanced Materials and Daejung Chemicals Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daejung Chemicals Metals and Hyosung Advanced 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 Hyosung Advanced Materials are associated (or correlated) with Daejung Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daejung Chemicals Metals has no effect on the direction of Hyosung Advanced i.e., Hyosung Advanced and Daejung Chemicals go up and down completely randomly.
Pair Corralation between Hyosung Advanced and Daejung Chemicals
Assuming the 90 days trading horizon Hyosung Advanced Materials is expected to under-perform the Daejung Chemicals. In addition to that, Hyosung Advanced is 2.3 times more volatile than Daejung Chemicals Metals. It trades about -0.27 of its total potential returns per unit of risk. Daejung Chemicals Metals is currently generating about -0.24 per unit of volatility. If you would invest 1,395,000 in Daejung Chemicals Metals on September 5, 2024 and sell it today you would lose (122,000) from holding Daejung Chemicals Metals or give up 8.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyosung Advanced Materials vs. Daejung Chemicals Metals
Performance |
| Timeline |
| Hyosung Advanced Mat |
| Daejung Chemicals Metals |
Hyosung Advanced and Daejung Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyosung Advanced and Daejung Chemicals
The main advantage of trading using opposite Hyosung Advanced and Daejung Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyosung Advanced position performs unexpectedly, Daejung Chemicals 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 Daejung Chemicals will offset losses from the drop in Daejung Chemicals' long position.| Hyosung Advanced vs. Daol Investment Securities | Hyosung Advanced vs. TS Investment Corp | Hyosung Advanced vs. Seohee Construction Co | Hyosung Advanced vs. Nh Investment And |
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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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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