Correlation Between Daeduck Electronics and Solution Advanced

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Can any of the company-specific risk be diversified away by investing in both Daeduck Electronics and Solution Advanced 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 Solution Advanced 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 Solution Advanced Technology, you can compare the effects of market volatilities on Daeduck Electronics and Solution Advanced 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 Solution Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daeduck Electronics and Solution Advanced.

Diversification Opportunities for Daeduck Electronics and Solution Advanced

-0.56
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Daeduck and Solution is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Daeduck Electronics Co and Solution Advanced Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solution Advanced 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 Solution Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solution Advanced has no effect on the direction of Daeduck Electronics i.e., Daeduck Electronics and Solution Advanced go up and down completely randomly.

Pair Corralation between Daeduck Electronics and Solution Advanced

Assuming the 90 days trading horizon Daeduck Electronics is expected to generate 2.03 times less return on investment than Solution Advanced. But when comparing it to its historical volatility, Daeduck Electronics Co is 4.26 times less risky than Solution Advanced. It trades about 0.12 of its potential returns per unit of risk. Solution Advanced Technology is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  140,000  in Solution Advanced Technology on October 23, 2024 and sell it today you would earn a total of  3,000  from holding Solution Advanced Technology or generate 2.14% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Daeduck Electronics Co  vs.  Solution Advanced Technology

 Performance 
       Timeline  
Daeduck Electronics 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Daeduck Electronics Co are ranked lower than 13 (%) 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 February 2025.
Solution Advanced 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Solution Advanced Technology 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.

Daeduck Electronics and Solution Advanced Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Daeduck Electronics and Solution Advanced

The main advantage of trading using opposite Daeduck Electronics and Solution Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daeduck Electronics position performs unexpectedly, Solution Advanced 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 Solution Advanced will offset losses from the drop in Solution Advanced's long position.
The idea behind Daeduck Electronics Co and Solution Advanced Technology 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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

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