Correlation Between Daehan Synthetic and Pungguk Ethanol

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

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

Diversification Opportunities for Daehan Synthetic and Pungguk Ethanol

0.05

Correlation Coefficient

Daehan Synthetic  Pungguk Ethanol

Significant diversification

The 3 months correlation between Daehan and Pungguk is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Daehan Synthetic Fiber and Pungguk Ethanol Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pungguk Ethanol Indu and Daehan Synthetic 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 Daehan Synthetic Fiber are associated (or correlated) with Pungguk Ethanol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pungguk Ethanol Indu has no effect on the direction of Daehan Synthetic i.e., Daehan Synthetic and Pungguk Ethanol go up and down completely randomly.

Pair Corralation between Daehan Synthetic and Pungguk Ethanol

Assuming the 90 days trading horizon Daehan Synthetic Fiber is expected to generate 0.97 times more return on investment than Pungguk Ethanol. However, Daehan Synthetic Fiber is 1.03 times less risky than Pungguk Ethanol. It trades about 0.08 of its potential returns per unit of risk. Pungguk Ethanol Industrial is currently generating about -0.12 per unit of risk. If you would invest  10,600,000  in Daehan Synthetic Fiber on September 13, 2024 and sell it today you would earn a total of  500,000  from holding Daehan Synthetic Fiber or generate 4.72% return on investment over 90 days.

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

Daehan Synthetic Fiber  vs.  Pungguk Ethanol Industrial

Daehan Synthetic Fiber

Risk-Adjusted Performance

6 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Daehan Synthetic Fiber are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Daehan Synthetic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pungguk Ethanol Indu

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pungguk Ethanol Industrial 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 Daehan Synthetic and Pungguk Ethanol

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

The idea behind Daehan Synthetic Fiber and Pungguk Ethanol Industrial 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..