Correlation Between DAEDUCK ELECTRONICS and Daelim Trading
Can any of the company-specific risk be diversified away by investing in both DAEDUCK ELECTRONICS and Daelim Trading 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 DAEDUCK ELECTRONICS and Daelim Trading into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DAEDUCK ELECTRONICS CoLtd and Daelim Trading Co, you can compare the effects of market volatilities on DAEDUCK ELECTRONICS and Daelim Trading 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 DAEDUCK ELECTRONICS with a short position of Daelim Trading. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAEDUCK ELECTRONICS and Daelim Trading.
Diversification Opportunities for DAEDUCK ELECTRONICS and Daelim Trading
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DAEDUCK and Daelim is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding DAEDUCK ELECTRONICS CoLtd and Daelim Trading Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daelim Trading and DAEDUCK ELECTRONICS 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 DAEDUCK ELECTRONICS CoLtd are associated (or correlated) with Daelim Trading. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daelim Trading has no effect on the direction of DAEDUCK ELECTRONICS i.e., DAEDUCK ELECTRONICS and Daelim Trading go up and down completely randomly.
Pair Corralation between DAEDUCK ELECTRONICS and Daelim Trading
Assuming the 90 days trading horizon DAEDUCK ELECTRONICS is expected to generate 2.99 times less return on investment than Daelim Trading. But when comparing it to its historical volatility, DAEDUCK ELECTRONICS CoLtd is 1.74 times less risky than Daelim Trading. It trades about 0.04 of its potential returns per unit of risk. Daelim Trading Co is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 267,500 in Daelim Trading Co on September 1, 2024 and sell it today you would earn a total of 10,000 from holding Daelim Trading Co or generate 3.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DAEDUCK ELECTRONICS CoLtd vs. Daelim Trading Co
Performance |
| Timeline |
| DAEDUCK ELECTRONICS CoLtd |
| Daelim Trading |
DAEDUCK ELECTRONICS and Daelim Trading Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DAEDUCK ELECTRONICS and Daelim Trading
The main advantage of trading using opposite DAEDUCK ELECTRONICS and Daelim Trading positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAEDUCK ELECTRONICS position performs unexpectedly, Daelim Trading 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 Daelim Trading will offset losses from the drop in Daelim Trading's long position.The idea behind DAEDUCK ELECTRONICS CoLtd and Daelim Trading Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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