Correlation Between Daeduck Electronics and Stic Investments

Can any of the company-specific risk be diversified away by investing in both Daeduck Electronics and Stic Investments 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 Daeduck Electronics and Stic Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Daeduck Electronics Co and Stic Investments, you can compare the effects of market volatilities on Daeduck Electronics and Stic Investments 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 Daeduck Electronics with a short position of Stic Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daeduck Electronics and Stic Investments.

Diversification Opportunities for Daeduck Electronics and Stic Investments

0.2

Correlation Coefficient

Daeduck Electronics  Stic Investments

Modest diversification

The 3 months correlation between Daeduck and Stic is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Daeduck Electronics Co and Stic Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stic Investments and Daeduck Electronics 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 Daeduck Electronics Co are associated (or correlated) with Stic Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stic Investments has no effect on the direction of Daeduck Electronics i.e., Daeduck Electronics and Stic Investments go up and down completely randomly.

Pair Corralation between Daeduck Electronics and Stic Investments

Assuming the 90 days trading horizon Daeduck Electronics is expected to generate 6.09 times less return on investment than Stic Investments. But when comparing it to its historical volatility, Daeduck Electronics Co is 1.97 times less risky than Stic Investments. It trades about 0.13 of its potential returns per unit of risk. Stic Investments is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest  744,000  in Stic Investments on September 17, 2024 and sell it today you would earn a total of  129,000  from holding Stic Investments or generate 17.34% return on investment over 90 days.

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

Daeduck Electronics Co  vs.  Stic Investments

Daeduck Electronics

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Daeduck Electronics Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Daeduck Electronics may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Stic Investments

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Stic Investments are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Stic Investments may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Daeduck Electronics and Stic Investments

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

The idea behind Daeduck Electronics Co and Stic Investments 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.

Check out your portfolio center.

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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.