Correlation Between Bank of America and Daesung Hi
Can any of the company-specific risk be diversified away by investing in both Bank of America and Daesung Hi 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 Bank of America and Daesung Hi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of America and Daesung Hi Tech Co, you can compare the effects of market volatilities on Bank of America and Daesung Hi 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 Bank of America with a short position of Daesung Hi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Daesung Hi.
Diversification Opportunities for Bank of America and Daesung Hi
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bank and Daesung is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Daesung Hi Tech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daesung Hi Tech and Bank of America 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 Bank of America are associated (or correlated) with Daesung Hi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daesung Hi Tech has no effect on the direction of Bank of America i.e., Bank of America and Daesung Hi go up and down completely randomly.
Pair Corralation between Bank of America and Daesung Hi
Considering the 90-day investment horizon Bank of America is expected to under-perform the Daesung Hi. But the stock apears to be less risky and, when comparing its historical volatility, Bank of America is 1.44 times less risky than Daesung Hi. The stock trades about -0.04 of its potential returns per unit of risk. The Daesung Hi Tech Co is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 297,500 in Daesung Hi Tech Co on December 1, 2024 and sell it today you would lose (500.00) from holding Daesung Hi Tech Co or give up 0.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Daesung Hi Tech Co
Performance |
| Timeline |
| Bank of America |
| Daesung Hi Tech |
Bank of America and Daesung Hi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Daesung Hi
The main advantage of trading using opposite Bank of America and Daesung Hi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Daesung Hi 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 Daesung Hi will offset losses from the drop in Daesung Hi's long position.| Bank of America vs. Citigroup | Bank of America vs. Wells Fargo | Bank of America vs. Toronto Dominion Bank | Bank of America vs. Royal Bank of |
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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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