Correlation Between Daelim Industrial and Spolytech

Can any of the company-specific risk be diversified away by investing in both Daelim Industrial and Spolytech 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 Daelim Industrial and Spolytech into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Daelim Industrial Co and Spolytech Co, you can compare the effects of market volatilities on Daelim Industrial and Spolytech 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 Daelim Industrial with a short position of Spolytech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daelim Industrial and Spolytech.

Diversification Opportunities for Daelim Industrial and Spolytech

-0.51

Correlation Coefficient

Daelim Industrial  Spolytech

Excellent diversification

The 3 months correlation between Daelim and Spolytech is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Daelim Industrial Co and Spolytech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spolytech and Daelim Industrial 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 Daelim Industrial Co are associated (or correlated) with Spolytech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spolytech has no effect on the direction of Daelim Industrial i.e., Daelim Industrial and Spolytech go up and down completely randomly.

Pair Corralation between Daelim Industrial and Spolytech

Assuming the 90 days trading horizon Daelim Industrial Co is expected to under-perform the Spolytech. But the stock apears to be less risky and, when comparing its historical volatility, Daelim Industrial Co is 1.49 times less risky than Spolytech. The stock trades about -0.05 of its potential returns per unit of risk. The Spolytech Co is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  130,096  in Spolytech Co on December 3, 2024 and sell it today you would earn a total of  32,504  from holding Spolytech Co or generate 24.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Daelim Industrial Co  vs.  Spolytech Co

Daelim Industrial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Daelim Industrial Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Daelim Industrial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Spolytech

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Spolytech Co are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Spolytech sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Daelim Industrial and Spolytech

The main advantage of trading using opposite Daelim Industrial and Spolytech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daelim Industrial position performs unexpectedly, Spolytech 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 Spolytech will offset losses from the drop in Spolytech's long position.

The idea behind Daelim Industrial Co and Spolytech 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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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.