Correlation Between Daesung Eltec and Stic Investments

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

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

Diversification Opportunities for Daesung Eltec and Stic Investments

0.51

Correlation Coefficient

Daesung Eltec  Stic Investments

Very weak diversification

The 3 months correlation between Daesung and Stic is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Daesung Eltec Co and Stic Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stic Investments and Daesung Eltec 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 Daesung Eltec Co are associated (or correlated) with Stic Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stic Investments has no effect on the direction of Daesung Eltec i.e., Daesung Eltec and Stic Investments go up and down completely randomly.

Pair Corralation between Daesung Eltec and Stic Investments

Assuming the 90 days trading horizon Daesung Eltec Co is expected to under-perform the Stic Investments. In addition to that, Daesung Eltec is 3.23 times more volatile than Stic Investments. It trades about -0.03 of its total potential returns per unit of risk. Stic Investments is currently generating about -0.09 per unit of volatility. If you would invest  860,196  in Stic Investments on December 24, 2024 and sell it today you would lose (81,196) from holding Stic Investments or give up 9.44% of portfolio value over 90 days.

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

Daesung Eltec Co  vs.  Stic Investments

Daesung Eltec

Risk-Adjusted Performance

Very Weak

Over the last 90 days Daesung Eltec Co 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.

Stic Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days Stic Investments 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.

Pair Trading with Daesung Eltec and Stic Investments

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

The idea behind Daesung Eltec Co and Stic Investments 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.

Check out your portfolio center.

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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.