Correlation Between Daelim Industrial and Alton Sports

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

Diversification Opportunities for Daelim Industrial and Alton Sports

0.88

Correlation Coefficient

Daelim Industrial  Alton Sports

Very poor diversification

The 3 months correlation between Daelim and Alton is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Daelim Industrial Co and Alton Sports CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alton Sports 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 Alton Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alton Sports CoLtd has no effect on the direction of Daelim Industrial i.e., Daelim Industrial and Alton Sports go up and down completely randomly.

Pair Corralation between Daelim Industrial and Alton Sports

Assuming the 90 days trading horizon Daelim Industrial Co is expected to under-perform the Alton Sports. In addition to that, Daelim Industrial is 2.17 times more volatile than Alton Sports CoLtd. It trades about -0.14 of its total potential returns per unit of risk. Alton Sports CoLtd is currently generating about -0.15 per unit of volatility. If you would invest  161,200  in Alton Sports CoLtd on September 2, 2024 and sell it today you would lose (13,100) from holding Alton Sports CoLtd or give up 8.13% of portfolio value over 90 days.

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

Daelim Industrial Co  vs.  Alton Sports CoLtd

Daelim Industrial

Risk-Adjusted Performance

0 of 100

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 weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Alton Sports CoLtd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alton Sports CoLtd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Daelim Industrial and Alton Sports

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

The idea behind Daelim Industrial Co and Alton Sports 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.