Correlation Between Solution Advanced and Dawonsys CoLtd
Can any of the company-specific risk be diversified away by investing in both Solution Advanced and Dawonsys CoLtd 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 Solution Advanced and Dawonsys CoLtd into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solution Advanced Technology and Dawonsys CoLtd, you can compare the effects of market volatilities on Solution Advanced and Dawonsys CoLtd 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 Solution Advanced with a short position of Dawonsys CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solution Advanced and Dawonsys CoLtd.
Diversification Opportunities for Solution Advanced and Dawonsys CoLtd
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Solution and Dawonsys is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Solution Advanced Technology and Dawonsys CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dawonsys CoLtd and Solution 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 Solution Advanced Technology are associated (or correlated) with Dawonsys CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dawonsys CoLtd has no effect on the direction of Solution Advanced i.e., Solution Advanced and Dawonsys CoLtd go up and down completely randomly.
Pair Corralation between Solution Advanced and Dawonsys CoLtd
Assuming the 90 days trading horizon Solution Advanced Technology is expected to generate 1.47 times more return on investment than Dawonsys CoLtd. However, Solution Advanced is 1.47 times more volatile than Dawonsys CoLtd. It trades about 0.09 of its potential returns per unit of risk. Dawonsys CoLtd is currently generating about -0.2 per unit of risk. If you would invest 136,900 in Solution Advanced Technology on September 13, 2024 and sell it today you would earn a total of 8,100 from holding Solution Advanced Technology or generate 5.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solution Advanced Technology vs. Dawonsys CoLtd
Performance |
| Timeline |
| Solution Advanced |
| Dawonsys CoLtd |
Solution Advanced and Dawonsys CoLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solution Advanced and Dawonsys CoLtd
The main advantage of trading using opposite Solution Advanced and Dawonsys CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solution Advanced position performs unexpectedly, Dawonsys CoLtd 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 Dawonsys CoLtd will offset losses from the drop in Dawonsys CoLtd's long position.| Solution Advanced vs. Samsung Electronics Co | Solution Advanced vs. Samsung Electronics Co | Solution Advanced vs. LG Energy Solution | Solution Advanced vs. SK Hynix |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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