Correlation Between Pungguk Ethanol and Daelim Industrial

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

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

Diversification Opportunities for Pungguk Ethanol and Daelim Industrial

0.6

Correlation Coefficient

Pungguk Ethanol  Daelim Industrial

Poor diversification

The 3 months correlation between Pungguk and Daelim is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Pungguk Ethanol Industrial and Daelim Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daelim Industrial and Pungguk Ethanol 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 Pungguk Ethanol Industrial are associated (or correlated) with Daelim Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daelim Industrial has no effect on the direction of Pungguk Ethanol i.e., Pungguk Ethanol and Daelim Industrial go up and down completely randomly.

Pair Corralation between Pungguk Ethanol and Daelim Industrial

Assuming the 90 days trading horizon Pungguk Ethanol Industrial is expected to under-perform the Daelim Industrial. But the stock apears to be less risky and, when comparing its historical volatility, Pungguk Ethanol Industrial is 1.37 times less risky than Daelim Industrial. The stock trades about -0.08 of its potential returns per unit of risk. The Daelim Industrial Co is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  1,967,672  in Daelim Industrial Co on December 1, 2024 and sell it today you would lose (67,672) from holding Daelim Industrial Co or give up 3.44% of portfolio value over 90 days.

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

Pungguk Ethanol Industrial  vs.  Daelim Industrial Co

Pungguk Ethanol Indu

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pungguk Ethanol Industrial 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.

Daelim Industrial

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Pungguk Ethanol and Daelim Industrial

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

The idea behind Pungguk Ethanol Industrial and Daelim Industrial 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.