Correlation Between Daishin Information and Pyung Hwa

Can any of the company-specific risk be diversified away by investing in both Daishin Information and Pyung Hwa 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 Daishin Information and Pyung Hwa into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Daishin Information Communications and Pyung Hwa Industrial, you can compare the effects of market volatilities on Daishin Information and Pyung Hwa 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 Daishin Information with a short position of Pyung Hwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daishin Information and Pyung Hwa.

Diversification Opportunities for Daishin Information and Pyung Hwa

-0.29

Correlation Coefficient

Daishin Information  Pyung Hwa

Very good diversification

The 3 months correlation between Daishin and Pyung is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Daishin Information Communicat and Pyung Hwa Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pyung Hwa Industrial and Daishin Information 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 Daishin Information Communications are associated (or correlated) with Pyung Hwa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pyung Hwa Industrial has no effect on the direction of Daishin Information i.e., Daishin Information and Pyung Hwa go up and down completely randomly.

Pair Corralation between Daishin Information and Pyung Hwa

Assuming the 90 days trading horizon Daishin Information is expected to generate 2.17 times less return on investment than Pyung Hwa. In addition to that, Daishin Information is 2.8 times more volatile than Pyung Hwa Industrial. It trades about 0.03 of its total potential returns per unit of risk. Pyung Hwa Industrial is currently generating about 0.2 per unit of volatility. If you would invest  91,200  in Pyung Hwa Industrial on October 14, 2024 and sell it today you would earn a total of  8,700  from holding Pyung Hwa Industrial or generate 9.54% return on investment over 90 days.

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

Daishin Information Communicat  vs.  Pyung Hwa Industrial

Daishin Information

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Daishin Information Communications are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Daishin Information sustained solid returns over the last few months and may actually be approaching a breakup point.

Pyung Hwa Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Daishin Information and Pyung Hwa

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

The idea behind Daishin Information Communications and Pyung Hwa 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.