Correlation Between Solus Advanced and Iljin Display
Can any of the company-specific risk be diversified away by investing in both Solus Advanced and Iljin Display 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 Solus Advanced and Iljin Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solus Advanced Materials and Iljin Display, you can compare the effects of market volatilities on Solus Advanced and Iljin Display 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 Solus Advanced with a short position of Iljin Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solus Advanced and Iljin Display.
Diversification Opportunities for Solus Advanced and Iljin Display
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Solus and Iljin is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Solus Advanced Materials and Iljin Display in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iljin Display and Solus 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 Solus Advanced Materials are associated (or correlated) with Iljin Display. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iljin Display has no effect on the direction of Solus Advanced i.e., Solus Advanced and Iljin Display go up and down completely randomly.
Pair Corralation between Solus Advanced and Iljin Display
Assuming the 90 days trading horizon Solus Advanced Materials is expected to generate 1.89 times more return on investment than Iljin Display. However, Solus Advanced is 1.89 times more volatile than Iljin Display. It trades about 0.01 of its potential returns per unit of risk. Iljin Display is currently generating about -0.04 per unit of risk. If you would invest 1,116,000 in Solus Advanced Materials on August 29, 2024 and sell it today you would lose (161,000) from holding Solus Advanced Materials or give up 14.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solus Advanced Materials vs. Iljin Display
Performance |
| Timeline |
| Solus Advanced Materials |
| Iljin Display |
Solus Advanced and Iljin Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solus Advanced and Iljin Display
The main advantage of trading using opposite Solus Advanced and Iljin Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solus Advanced position performs unexpectedly, Iljin Display 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 Iljin Display will offset losses from the drop in Iljin Display's long position.| Solus Advanced vs. Sewoon Medical Co | Solus Advanced vs. Genie Music | Solus Advanced vs. Daou Technology | Solus Advanced vs. Hana Technology Co |
| Iljin Display vs. LG Display Co | Iljin Display vs. Organic Special Pet | Iljin Display vs. Display Tech Co | Iljin Display vs. ABOV Semiconductor Co |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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