Correlation Between Tae Kyung and Duksan Hi

Can any of the company-specific risk be diversified away by investing in both Tae Kyung and Duksan Hi 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 Tae Kyung and Duksan Hi into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tae Kyung Chemical and Duksan Hi Metal, you can compare the effects of market volatilities on Tae Kyung and Duksan Hi 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 Tae Kyung with a short position of Duksan Hi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tae Kyung and Duksan Hi.

Diversification Opportunities for Tae Kyung and Duksan Hi

0.33

Correlation Coefficient

Tae Kyung  Duksan Hi

Weak diversification

The 3 months correlation between Tae and Duksan is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Tae Kyung Chemical and Duksan Hi Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duksan Hi Metal and Tae Kyung 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 Tae Kyung Chemical are associated (or correlated) with Duksan Hi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Duksan Hi Metal has no effect on the direction of Tae Kyung i.e., Tae Kyung and Duksan Hi go up and down completely randomly.

Pair Corralation between Tae Kyung and Duksan Hi

Assuming the 90 days trading horizon Tae Kyung is expected to generate 2.71 times less return on investment than Duksan Hi. But when comparing it to its historical volatility, Tae Kyung Chemical is 1.54 times less risky than Duksan Hi. It trades about 0.28 of its potential returns per unit of risk. Duksan Hi Metal is currently generating about 0.5 of returns per unit of risk over similar time horizon. If you would invest  319,500  in Duksan Hi Metal on October 10, 2024 and sell it today you would earn a total of  100,000  from holding Duksan Hi Metal or generate 31.3% return on investment over 90 days.

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

Tae Kyung Chemical  vs.  Duksan Hi Metal

Tae Kyung Chemical

Risk-Adjusted Performance

0 of 100

Very Weak

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

Duksan Hi Metal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Duksan Hi Metal 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Tae Kyung and Duksan Hi

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

The idea behind Tae Kyung Chemical and Duksan Hi Metal 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.