Correlation Between Iljin Display and Design

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

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

Diversification Opportunities for Iljin Display and Design

-0.03

Correlation Coefficient

Iljin Display  Design

Good diversification

The 3 months correlation between Iljin and Design is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Iljin Display and Design Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Design and Iljin Display 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 Iljin Display are associated (or correlated) with Design. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Design has no effect on the direction of Iljin Display i.e., Iljin Display and Design go up and down completely randomly.

Pair Corralation between Iljin Display and Design

Assuming the 90 days trading horizon Iljin Display is expected to generate 0.39 times more return on investment than Design. However, Iljin Display is 2.56 times less risky than Design. It trades about 0.2 of its potential returns per unit of risk. Design Co is currently generating about -0.12 per unit of risk. If you would invest  83,600  in Iljin Display on October 24, 2024 and sell it today you would earn a total of  6,800  from holding Iljin Display or generate 8.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	31.58%
Values	Daily Returns

Iljin Display  vs.  Design Co

Iljin Display

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Iljin Display are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Iljin Display is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Design

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Iljin Display and Design

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

The idea behind Iljin Display and Design Co 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..