Correlation Between DAEDUCK ELECTRONICS and Hyosung Heavy
Can any of the company-specific risk be diversified away by investing in both DAEDUCK ELECTRONICS and Hyosung Heavy 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 Hyosung Heavy 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 Hyosung Heavy Industries, you can compare the effects of market volatilities on DAEDUCK ELECTRONICS and Hyosung Heavy 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 Hyosung Heavy. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAEDUCK ELECTRONICS and Hyosung Heavy.
Diversification Opportunities for DAEDUCK ELECTRONICS and Hyosung Heavy
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between DAEDUCK and Hyosung is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding DAEDUCK ELECTRONICS CoLtd and Hyosung Heavy Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyosung Heavy Industries 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 Hyosung Heavy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyosung Heavy Industries has no effect on the direction of DAEDUCK ELECTRONICS i.e., DAEDUCK ELECTRONICS and Hyosung Heavy go up and down completely randomly.
Pair Corralation between DAEDUCK ELECTRONICS and Hyosung Heavy
Assuming the 90 days trading horizon DAEDUCK ELECTRONICS CoLtd is expected to under-perform the Hyosung Heavy. But the stock apears to be less risky and, when comparing its historical volatility, DAEDUCK ELECTRONICS CoLtd is 2.81 times less risky than Hyosung Heavy. The stock trades about -0.03 of its potential returns per unit of risk. The Hyosung Heavy Industries is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 6,705,680 in Hyosung Heavy Industries on September 1, 2024 and sell it today you would earn a total of 33,644,320 from holding Hyosung Heavy Industries or generate 501.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.77% |
| Values | Daily Returns |
DAEDUCK ELECTRONICS CoLtd vs. Hyosung Heavy Industries
Performance |
| Timeline |
| DAEDUCK ELECTRONICS CoLtd |
| Hyosung Heavy Industries |
DAEDUCK ELECTRONICS and Hyosung Heavy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DAEDUCK ELECTRONICS and Hyosung Heavy
The main advantage of trading using opposite DAEDUCK ELECTRONICS and Hyosung Heavy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAEDUCK ELECTRONICS position performs unexpectedly, Hyosung Heavy 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 Hyosung Heavy will offset losses from the drop in Hyosung Heavy's long position.The idea behind DAEDUCK ELECTRONICS CoLtd and Hyosung Heavy Industries 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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