Correlation Between Daejoo Electronic and Guyoung Technology
Can any of the company-specific risk be diversified away by investing in both Daejoo Electronic and Guyoung 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 Daejoo Electronic and Guyoung Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daejoo Electronic Materials and Guyoung Technology Co, you can compare the effects of market volatilities on Daejoo Electronic and Guyoung 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 Daejoo Electronic with a short position of Guyoung Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daejoo Electronic and Guyoung Technology.
Diversification Opportunities for Daejoo Electronic and Guyoung Technology
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Daejoo and Guyoung is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Daejoo Electronic Materials and Guyoung Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guyoung Technology and Daejoo Electronic 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 Daejoo Electronic Materials are associated (or correlated) with Guyoung Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guyoung Technology has no effect on the direction of Daejoo Electronic i.e., Daejoo Electronic and Guyoung Technology go up and down completely randomly.
Pair Corralation between Daejoo Electronic and Guyoung Technology
Assuming the 90 days trading horizon Daejoo Electronic Materials is expected to under-perform the Guyoung Technology. In addition to that, Daejoo Electronic is 1.63 times more volatile than Guyoung Technology Co. It trades about -0.16 of its total potential returns per unit of risk. Guyoung Technology Co is currently generating about -0.05 per unit of volatility. If you would invest 211,500 in Guyoung Technology Co on September 26, 2024 and sell it today you would lose (7,000) from holding Guyoung Technology Co or give up 3.31% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Daejoo Electronic Materials vs. Guyoung Technology Co
Performance |
Timeline |
Daejoo Electronic |
Guyoung Technology |
Daejoo Electronic and Guyoung Technology Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Daejoo Electronic and Guyoung Technology
The main advantage of trading using opposite Daejoo Electronic and Guyoung Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daejoo Electronic position performs unexpectedly, Guyoung 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 Guyoung Technology will offset losses from the drop in Guyoung Technology's long position.The idea behind Daejoo Electronic Materials and Guyoung Technology Co 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.Guyoung Technology vs. Woori Technology Investment | Guyoung Technology vs. Samsung Card Co | Guyoung Technology vs. Korea Real Estate | Guyoung Technology vs. CHOROKBAEM PANY Co |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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