Correlation Between Cafe24 Corp and DSC Investment
Can any of the company-specific risk be diversified away by investing in both Cafe24 Corp and DSC Investment 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 Cafe24 Corp and DSC Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cafe24 Corp and DSC Investment, you can compare the effects of market volatilities on Cafe24 Corp and DSC Investment 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 Cafe24 Corp with a short position of DSC Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cafe24 Corp and DSC Investment.
Diversification Opportunities for Cafe24 Corp and DSC Investment
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Cafe24 and DSC is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Cafe24 Corp and DSC Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DSC Investment and Cafe24 Corp 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 Cafe24 Corp are associated (or correlated) with DSC Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DSC Investment has no effect on the direction of Cafe24 Corp i.e., Cafe24 Corp and DSC Investment go up and down completely randomly.
Pair Corralation between Cafe24 Corp and DSC Investment
Assuming the 90 days trading horizon Cafe24 Corp is expected to generate 2.12 times more return on investment than DSC Investment. However, Cafe24 Corp is 2.12 times more volatile than DSC Investment. It trades about 0.09 of its potential returns per unit of risk. DSC Investment is currently generating about -0.02 per unit of risk. If you would invest 868,000 in Cafe24 Corp on September 6, 2024 and sell it today you would earn a total of 2,467,000 from holding Cafe24 Corp or generate 284.22% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Cafe24 Corp vs. DSC Investment
Performance |
Timeline |
Cafe24 Corp |
DSC Investment |
Cafe24 Corp and DSC Investment Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Cafe24 Corp and DSC Investment
The main advantage of trading using opposite Cafe24 Corp and DSC Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cafe24 Corp position performs unexpectedly, DSC Investment 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 DSC Investment will offset losses from the drop in DSC Investment's long position.Cafe24 Corp vs. FNSTech Co | Cafe24 Corp vs. Lotte Chilsung Beverage | Cafe24 Corp vs. BIT Computer Co | Cafe24 Corp vs. PH Tech Co |
DSC Investment vs. Settlebank | DSC Investment vs. Alton Sports CoLtd | DSC Investment vs. Cots Technology Co | DSC Investment vs. Solution Advanced Technology |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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