Correlation Between Solution Advanced and Daebo Magnetic
Can any of the company-specific risk be diversified away by investing in both Solution Advanced and Daebo Magnetic 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 Daebo Magnetic 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 Daebo Magnetic CoLtd, you can compare the effects of market volatilities on Solution Advanced and Daebo Magnetic 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 Daebo Magnetic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solution Advanced and Daebo Magnetic.
Diversification Opportunities for Solution Advanced and Daebo Magnetic
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Solution and Daebo is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Solution Advanced Technology and Daebo Magnetic CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daebo Magnetic 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 Daebo Magnetic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daebo Magnetic CoLtd has no effect on the direction of Solution Advanced i.e., Solution Advanced and Daebo Magnetic go up and down completely randomly.
Pair Corralation between Solution Advanced and Daebo Magnetic
Assuming the 90 days trading horizon Solution Advanced Technology is expected to generate 0.96 times more return on investment than Daebo Magnetic. However, Solution Advanced Technology is 1.04 times less risky than Daebo Magnetic. It trades about -0.01 of its potential returns per unit of risk. Daebo Magnetic CoLtd is currently generating about -0.13 per unit of risk. If you would invest 167,800 in Solution Advanced Technology on September 14, 2024 and sell it today you would lose (19,600) from holding Solution Advanced Technology or give up 11.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solution Advanced Technology vs. Daebo Magnetic CoLtd
Performance |
| Timeline |
| Solution Advanced |
| Daebo Magnetic CoLtd |
Solution Advanced and Daebo Magnetic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solution Advanced and Daebo Magnetic
The main advantage of trading using opposite Solution Advanced and Daebo Magnetic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solution Advanced position performs unexpectedly, Daebo Magnetic 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 Daebo Magnetic will offset losses from the drop in Daebo Magnetic'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 |
| Daebo Magnetic vs. KT Submarine Telecom | Daebo Magnetic vs. Hansol Homedeco Co | Daebo Magnetic vs. CJ Seafood Corp | Daebo Magnetic vs. Seoul Food Industrial |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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