Correlation Between Daehan Synthetic and ASTORY CoLtd

Can any of the company-specific risk be diversified away by investing in both Daehan Synthetic and ASTORY 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 Daehan Synthetic and ASTORY CoLtd 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 ASTORY CoLtd, you can compare the effects of market volatilities on Daehan Synthetic and ASTORY 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 Daehan Synthetic with a short position of ASTORY CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daehan Synthetic and ASTORY CoLtd.

Diversification Opportunities for Daehan Synthetic and ASTORY CoLtd

0.32

Correlation Coefficient

Daehan Synthetic  ASTORY CoLtd

Weak diversification

The 3 months correlation between Daehan and ASTORY is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Daehan Synthetic Fiber and ASTORY CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASTORY CoLtd 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 ASTORY CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASTORY CoLtd has no effect on the direction of Daehan Synthetic i.e., Daehan Synthetic and ASTORY CoLtd go up and down completely randomly.

Pair Corralation between Daehan Synthetic and ASTORY CoLtd

Assuming the 90 days trading horizon Daehan Synthetic is expected to generate 1.25 times less return on investment than ASTORY CoLtd. But when comparing it to its historical volatility, Daehan Synthetic Fiber is 1.62 times less risky than ASTORY CoLtd. It trades about 0.21 of its potential returns per unit of risk. ASTORY CoLtd is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  666,000  in ASTORY CoLtd on September 4, 2024 and sell it today you would earn a total of  150,000  from holding ASTORY CoLtd or generate 22.52% return on investment over 90 days.

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

Daehan Synthetic Fiber  vs.  ASTORY CoLtd

Daehan Synthetic Fiber

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Daehan Synthetic Fiber are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Daehan Synthetic sustained solid returns over the last few months and may actually be approaching a breakup point.

ASTORY CoLtd

Risk-Adjusted Performance

13 of 100

Good

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

Pair Trading with Daehan Synthetic and ASTORY CoLtd

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

The idea behind Daehan Synthetic Fiber and ASTORY 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 Anywhere module to track or share privately all of your investments from the convenience of any device.