Correlation Between Daelim Industrial and DYPNF CoLtd

Can any of the company-specific risk be diversified away by investing in both Daelim Industrial and DYPNF CoLtd 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 DYPNF CoLtd 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 DYPNF CoLtd, you can compare the effects of market volatilities on Daelim Industrial and DYPNF CoLtd 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 DYPNF CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daelim Industrial and DYPNF CoLtd.

Diversification Opportunities for Daelim Industrial and DYPNF CoLtd

0.02

Correlation Coefficient

Daelim Industrial  DYPNF CoLtd

Significant diversification

The 3 months correlation between Daelim and DYPNF is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Daelim Industrial Co and DYPNF CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DYPNF CoLtd 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 DYPNF CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DYPNF CoLtd has no effect on the direction of Daelim Industrial i.e., Daelim Industrial and DYPNF CoLtd go up and down completely randomly.

Pair Corralation between Daelim Industrial and DYPNF CoLtd

Assuming the 90 days trading horizon Daelim Industrial Co is expected to under-perform the DYPNF CoLtd. But the stock apears to be less risky and, when comparing its historical volatility, Daelim Industrial Co is 1.89 times less risky than DYPNF CoLtd. The stock trades about -0.05 of its potential returns per unit of risk. The DYPNF CoLtd is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,175,000  in DYPNF CoLtd on December 3, 2024 and sell it today you would earn a total of  270,000  from holding DYPNF CoLtd or generate 22.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Daelim Industrial Co  vs.  DYPNF CoLtd

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.

DYPNF CoLtd

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DYPNF CoLtd are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, DYPNF CoLtd sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Daelim Industrial and DYPNF CoLtd

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

The idea behind Daelim Industrial Co and DYPNF CoLtd 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.