Correlation Between Daesung Eltec and Cytogen

Can any of the company-specific risk be diversified away by investing in both Daesung Eltec and Cytogen 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 Cytogen 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 Cytogen, you can compare the effects of market volatilities on Daesung Eltec and Cytogen 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 Cytogen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daesung Eltec and Cytogen.

Diversification Opportunities for Daesung Eltec and Cytogen

-0.05

Correlation Coefficient

Daesung Eltec  Cytogen

Good diversification

The 3 months correlation between Daesung and Cytogen is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Daesung Eltec Co and Cytogen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cytogen 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 Cytogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cytogen has no effect on the direction of Daesung Eltec i.e., Daesung Eltec and Cytogen go up and down completely randomly.

Pair Corralation between Daesung Eltec and Cytogen

Assuming the 90 days trading horizon Daesung Eltec Co is expected to generate 2.44 times more return on investment than Cytogen. However, Daesung Eltec is 2.44 times more volatile than Cytogen. It trades about -0.03 of its potential returns per unit of risk. Cytogen is currently generating about -0.08 per unit of risk. If you would invest  81,800  in Daesung Eltec Co on December 25, 2024 and sell it today you would lose (14,500) from holding Daesung Eltec Co or give up 17.73% of portfolio value over 90 days.

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

Daesung Eltec Co  vs.  Cytogen

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.

Cytogen

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cytogen 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 Cytogen

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

The idea behind Daesung Eltec Co and Cytogen 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.