Correlation Between Daihan Pharmaceutical and JETEMA

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

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

Diversification Opportunities for Daihan Pharmaceutical and JETEMA

-0.18

Correlation Coefficient

Daihan Pharmaceutical  JETEMA

Good diversification

The 3 months correlation between Daihan and JETEMA is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Daihan Pharmaceutical CoLtd and JETEMA Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JETEMA and Daihan Pharmaceutical 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 Daihan Pharmaceutical CoLtd are associated (or correlated) with JETEMA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JETEMA has no effect on the direction of Daihan Pharmaceutical i.e., Daihan Pharmaceutical and JETEMA go up and down completely randomly.

Pair Corralation between Daihan Pharmaceutical and JETEMA

Assuming the 90 days trading horizon Daihan Pharmaceutical CoLtd is expected to generate 0.29 times more return on investment than JETEMA. However, Daihan Pharmaceutical CoLtd is 3.39 times less risky than JETEMA. It trades about -0.05 of its potential returns per unit of risk. JETEMA Co is currently generating about -0.2 per unit of risk. If you would invest  2,662,306  in Daihan Pharmaceutical CoLtd on November 29, 2024 and sell it today you would lose (77,306) from holding Daihan Pharmaceutical CoLtd or give up 2.9% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.28%
Values	Daily Returns

Daihan Pharmaceutical CoLtd  vs.  JETEMA Co

Daihan Pharmaceutical

Risk-Adjusted Performance

Very Weak

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

JETEMA

Risk-Adjusted Performance

Very Weak

Over the last 90 days JETEMA Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Daihan Pharmaceutical and JETEMA

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

The idea behind Daihan Pharmaceutical CoLtd and JETEMA 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 CEOs Directory module to screen CEOs from public companies around the world.