Correlation Between CU Tech and Daewoo Engineering
Can any of the company-specific risk be diversified away by investing in both CU Tech and Daewoo Engineering 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 CU Tech and Daewoo Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CU Tech Corp and Daewoo Engineering Construction, you can compare the effects of market volatilities on CU Tech and Daewoo Engineering 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 CU Tech with a short position of Daewoo Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of CU Tech and Daewoo Engineering.
Diversification Opportunities for CU Tech and Daewoo Engineering
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 376290 and Daewoo is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding CU Tech Corp and Daewoo Engineering Constructio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daewoo Engineering and CU Tech 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 CU Tech Corp are associated (or correlated) with Daewoo Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daewoo Engineering has no effect on the direction of CU Tech i.e., CU Tech and Daewoo Engineering go up and down completely randomly.
Pair Corralation between CU Tech and Daewoo Engineering
Assuming the 90 days trading horizon CU Tech Corp is expected to generate 0.72 times more return on investment than Daewoo Engineering. However, CU Tech Corp is 1.39 times less risky than Daewoo Engineering. It trades about -0.07 of its potential returns per unit of risk. Daewoo Engineering Construction is currently generating about -0.06 per unit of risk. If you would invest 318,500 in CU Tech Corp on August 30, 2024 and sell it today you would lose (17,500) from holding CU Tech Corp or give up 5.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CU Tech Corp vs. Daewoo Engineering Constructio
Performance |
| Timeline |
| CU Tech Corp |
| Daewoo Engineering |
CU Tech and Daewoo Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CU Tech and Daewoo Engineering
The main advantage of trading using opposite CU Tech and Daewoo Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CU Tech position performs unexpectedly, Daewoo Engineering 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 Daewoo Engineering will offset losses from the drop in Daewoo Engineering's long position.| CU Tech vs. Atinum Investment Co | CU Tech vs. Coloray International Investment | CU Tech vs. DB Financial Investment | CU Tech vs. NH Investment Securities |
| Daewoo Engineering vs. Air Busan Co | Daewoo Engineering vs. Korea Air Svc | Daewoo Engineering vs. Cloud Air CoLtd | Daewoo Engineering vs. Jeju Air 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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