Correlation Between DAEMO Engineering and Seoam Machinery
Can any of the company-specific risk be diversified away by investing in both DAEMO Engineering and Seoam 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 DAEMO Engineering and Seoam Machinery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DAEMO Engineering Co and Seoam Machinery Industry, you can compare the effects of market volatilities on DAEMO Engineering and Seoam 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 DAEMO Engineering with a short position of Seoam Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAEMO Engineering and Seoam Machinery.
Diversification Opportunities for DAEMO Engineering and Seoam Machinery
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between DAEMO and Seoam is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding DAEMO Engineering Co and Seoam Machinery Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seoam Machinery Industry and DAEMO Engineering 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 DAEMO Engineering Co are associated (or correlated) with Seoam Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seoam Machinery Industry has no effect on the direction of DAEMO Engineering i.e., DAEMO Engineering and Seoam Machinery go up and down completely randomly.
Pair Corralation between DAEMO Engineering and Seoam Machinery
Assuming the 90 days trading horizon DAEMO Engineering Co is expected to generate 2.85 times more return on investment than Seoam Machinery. However, DAEMO Engineering is 2.85 times more volatile than Seoam Machinery Industry. It trades about 0.08 of its potential returns per unit of risk. Seoam Machinery Industry is currently generating about -0.13 per unit of risk. If you would invest 905,000 in DAEMO Engineering Co on November 5, 2024 and sell it today you would earn a total of 37,000 from holding DAEMO Engineering Co or generate 4.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
DAEMO Engineering Co vs. Seoam Machinery Industry
Performance |
| Timeline |
| DAEMO Engineering |
| Seoam Machinery Industry |
DAEMO Engineering and Seoam Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DAEMO Engineering and Seoam Machinery
The main advantage of trading using opposite DAEMO Engineering and Seoam Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAEMO Engineering position performs unexpectedly, Seoam 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 Seoam Machinery will offset losses from the drop in Seoam Machinery's long position.| DAEMO Engineering vs. Raontech | DAEMO Engineering vs. Tway Air Co | DAEMO Engineering vs. KMH Hitech Co | DAEMO Engineering vs. Solution Advanced Technology |
| Seoam Machinery vs. Daesung Industrial Co | Seoam Machinery vs. Seoyon Topmetal Co | Seoam Machinery vs. PJ Metal Co | Seoam Machinery vs. Sajo Seafood |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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