Correlation Between Innometry and Daewoo Engineering
Can any of the company-specific risk be diversified away by investing in both Innometry 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 Innometry and Daewoo Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innometry Co and Daewoo Engineering Construction, you can compare the effects of market volatilities on Innometry 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 Innometry with a short position of Daewoo Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innometry and Daewoo Engineering.
Diversification Opportunities for Innometry and Daewoo Engineering
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Innometry and Daewoo is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Innometry 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 Innometry 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 Innometry 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 Innometry i.e., Innometry and Daewoo Engineering go up and down completely randomly.
Pair Corralation between Innometry and Daewoo Engineering
Assuming the 90 days trading horizon Innometry Co is expected to under-perform the Daewoo Engineering. In addition to that, Innometry is 1.65 times more volatile than Daewoo Engineering Construction. It trades about -0.04 of its total potential returns per unit of risk. Daewoo Engineering Construction is currently generating about -0.03 per unit of volatility. If you would invest 440,000 in Daewoo Engineering Construction on September 4, 2024 and sell it today you would lose (77,000) from holding Daewoo Engineering Construction or give up 17.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innometry Co vs. Daewoo Engineering Constructio
Performance |
| Timeline |
| Innometry |
| Daewoo Engineering |
Innometry and Daewoo Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innometry and Daewoo Engineering
The main advantage of trading using opposite Innometry and Daewoo Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innometry 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.| Innometry vs. Daejoo Electronic Materials | Innometry vs. Parksystems Corp | Innometry vs. BH Co | Innometry 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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