Correlation Between I-Components and Daewoo SBI

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

By analyzing existing cross correlation between i Components Co and Daewoo SBI SPAC, you can compare the effects of market volatilities on I-Components and Daewoo SBI 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 I-Components with a short position of Daewoo SBI. Check out your portfolio center. Please also check ongoing floating volatility patterns of I-Components and Daewoo SBI.

Diversification Opportunities for I-Components and Daewoo SBI

0.09

Correlation Coefficient

I-Components  Daewoo SBI

Significant diversification

The 3 months correlation between I-Components and Daewoo is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding i Components Co and Daewoo SBI SPAC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daewoo SBI SPAC and I-Components 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 i Components Co are associated (or correlated) with Daewoo SBI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daewoo SBI SPAC has no effect on the direction of I-Components i.e., I-Components and Daewoo SBI go up and down completely randomly.

Pair Corralation between I-Components and Daewoo SBI

Assuming the 90 days trading horizon I-Components is expected to generate 15.56 times less return on investment than Daewoo SBI. But when comparing it to its historical volatility, i Components Co is 6.49 times less risky than Daewoo SBI. It trades about 0.07 of its potential returns per unit of risk. Daewoo SBI SPAC is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  240,000  in Daewoo SBI SPAC on September 22, 2024 and sell it today you would earn a total of  40,000  from holding Daewoo SBI SPAC or generate 16.67% return on investment over 90 days.

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

i Components Co  vs.  Daewoo SBI SPAC

i Components

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in i Components Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, I-Components may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Daewoo SBI SPAC

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with I-Components and Daewoo SBI

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

The idea behind i Components Co and Daewoo SBI SPAC 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.