Correlation Between Daol Investment and Eugene Technology

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

By analyzing existing cross correlation between Daol Investment Securities and Eugene Technology CoLtd, you can compare the effects of market volatilities on Daol Investment and Eugene Technology 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 Daol Investment with a short position of Eugene Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daol Investment and Eugene Technology.

Diversification Opportunities for Daol Investment and Eugene Technology

-0.2

Correlation Coefficient

Daol Investment  Eugene Technology

Good diversification

The 3 months correlation between Daol and Eugene is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Daol Investment Securities and Eugene Technology CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eugene Technology CoLtd and Daol Investment 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 Daol Investment Securities are associated (or correlated) with Eugene Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eugene Technology CoLtd has no effect on the direction of Daol Investment i.e., Daol Investment and Eugene Technology go up and down completely randomly.

Pair Corralation between Daol Investment and Eugene Technology

Assuming the 90 days trading horizon Daol Investment is expected to generate 5.4 times less return on investment than Eugene Technology. But when comparing it to its historical volatility, Daol Investment Securities is 1.2 times less risky than Eugene Technology. It trades about 0.01 of its potential returns per unit of risk. Eugene Technology CoLtd is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,715,943  in Eugene Technology CoLtd on October 24, 2024 and sell it today you would earn a total of  1,114,057  from holding Eugene Technology CoLtd or generate 41.02% return on investment over 90 days.

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

Daol Investment Securities  vs.  Eugene Technology CoLtd

Daol Investment Secu

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Daol Investment Securities are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Daol Investment may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Eugene Technology CoLtd

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Eugene Technology CoLtd are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Eugene Technology may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Daol Investment and Eugene Technology

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

The idea behind Daol Investment Securities and Eugene Technology CoLtd 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.