Correlation Between Solus Advanced and Daejoo Electronic
Can any of the company-specific risk be diversified away by investing in both Solus Advanced and Daejoo Electronic 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 Daejoo Electronic 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 Daejoo Electronic Materials, you can compare the effects of market volatilities on Solus Advanced and Daejoo Electronic 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 Daejoo Electronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solus Advanced and Daejoo Electronic.
Diversification Opportunities for Solus Advanced and Daejoo Electronic
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Solus and Daejoo is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Solus Advanced Materials and Daejoo Electronic Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daejoo Electronic 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 Daejoo Electronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daejoo Electronic has no effect on the direction of Solus Advanced i.e., Solus Advanced and Daejoo Electronic go up and down completely randomly.
Pair Corralation between Solus Advanced and Daejoo Electronic
Assuming the 90 days trading horizon Solus Advanced Materials is expected to under-perform the Daejoo Electronic. In addition to that, Solus Advanced is 1.05 times more volatile than Daejoo Electronic Materials. It trades about -0.02 of its total potential returns per unit of risk. Daejoo Electronic Materials is currently generating about 0.03 per unit of volatility. If you would invest 8,739,583 in Daejoo Electronic Materials on October 27, 2024 and sell it today you would earn a total of 1,590,417 from holding Daejoo Electronic Materials or generate 18.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solus Advanced Materials vs. Daejoo Electronic Materials
Performance |
| Timeline |
| Solus Advanced Materials |
| Daejoo Electronic |
Solus Advanced and Daejoo Electronic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solus Advanced and Daejoo Electronic
The main advantage of trading using opposite Solus Advanced and Daejoo Electronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solus Advanced position performs unexpectedly, Daejoo Electronic 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 Daejoo Electronic will offset losses from the drop in Daejoo Electronic's long position.| Solus Advanced vs. Solution Advanced Technology | Solus Advanced vs. Dongwoon Anatech Co | Solus Advanced vs. Raontech | Solus Advanced vs. NewFlex Technology Co |
| Daejoo Electronic vs. Samsung Electronics Co | Daejoo Electronic vs. Samsung Electronics Co | Daejoo Electronic vs. SK Hynix | Daejoo Electronic vs. HMM 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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