Correlation Between Taekwang Ind and DAEDUCK ELECTRONICS

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

By analyzing existing cross correlation between Taekwang Ind and DAEDUCK ELECTRONICS CoLtd, you can compare the effects of market volatilities on Taekwang Ind and DAEDUCK ELECTRONICS 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 Taekwang Ind with a short position of DAEDUCK ELECTRONICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taekwang Ind and DAEDUCK ELECTRONICS.

Diversification Opportunities for Taekwang Ind and DAEDUCK ELECTRONICS

0.38

Correlation Coefficient

Taekwang Ind  DAEDUCK ELECTRONICS

Weak diversification

The 3 months correlation between Taekwang and DAEDUCK is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Taekwang Ind and DAEDUCK ELECTRONICS CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DAEDUCK ELECTRONICS CoLtd and Taekwang Ind 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 Taekwang Ind are associated (or correlated) with DAEDUCK ELECTRONICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DAEDUCK ELECTRONICS CoLtd has no effect on the direction of Taekwang Ind i.e., Taekwang Ind and DAEDUCK ELECTRONICS go up and down completely randomly.

Pair Corralation between Taekwang Ind and DAEDUCK ELECTRONICS

Assuming the 90 days trading horizon Taekwang Ind is expected to generate 0.83 times more return on investment than DAEDUCK ELECTRONICS. However, Taekwang Ind is 1.2 times less risky than DAEDUCK ELECTRONICS. It trades about 0.23 of its potential returns per unit of risk. DAEDUCK ELECTRONICS CoLtd is currently generating about 0.01 per unit of risk. If you would invest  62,400,000  in Taekwang Ind on November 29, 2024 and sell it today you would earn a total of  14,600,000  from holding Taekwang Ind or generate 23.4% return on investment over 90 days.

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

Taekwang Ind  vs.  DAEDUCK ELECTRONICS CoLtd

Taekwang Ind

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Taekwang Ind are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Taekwang Ind sustained solid returns over the last few months and may actually be approaching a breakup point.

DAEDUCK ELECTRONICS CoLtd

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Taekwang Ind and DAEDUCK ELECTRONICS

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

The idea behind Taekwang Ind and DAEDUCK ELECTRONICS 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.