Correlation Between ENERGYMACHINERY KOREA and Daishin Balance

Can any of the company-specific risk be diversified away by investing in both ENERGYMACHINERY KOREA and Daishin Balance 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 ENERGYMACHINERY KOREA and Daishin Balance into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ENERGYMACHINERY KOREA CoLtd and Daishin Balance No8, you can compare the effects of market volatilities on ENERGYMACHINERY KOREA and Daishin Balance 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 ENERGYMACHINERY KOREA with a short position of Daishin Balance. Check out your portfolio center. Please also check ongoing floating volatility patterns of ENERGYMACHINERY KOREA and Daishin Balance.

Diversification Opportunities for ENERGYMACHINERY KOREA and Daishin Balance

0.69

Correlation Coefficient

ENERGYMACHINERY KOREA  Daishin Balance

Poor diversification

The 3 months correlation between ENERGYMACHINERY and Daishin is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding ENERGYMACHINERY KOREA CoLtd and Daishin Balance No8 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daishin Balance No8 and ENERGYMACHINERY KOREA 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 ENERGYMACHINERY KOREA CoLtd are associated (or correlated) with Daishin Balance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daishin Balance No8 has no effect on the direction of ENERGYMACHINERY KOREA i.e., ENERGYMACHINERY KOREA and Daishin Balance go up and down completely randomly.

Pair Corralation between ENERGYMACHINERY KOREA and Daishin Balance

Assuming the 90 days trading horizon ENERGYMACHINERY KOREA CoLtd is expected to generate 1.07 times more return on investment than Daishin Balance. However, ENERGYMACHINERY KOREA is 1.07 times more volatile than Daishin Balance No8. It trades about 0.06 of its potential returns per unit of risk. Daishin Balance No8 is currently generating about -0.22 per unit of risk. If you would invest  210,500  in ENERGYMACHINERY KOREA CoLtd on September 25, 2024 and sell it today you would earn a total of  19,000  from holding ENERGYMACHINERY KOREA CoLtd or generate 9.03% return on investment over 90 days.

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

ENERGYMACHINERY KOREA CoLtd  vs.  Daishin Balance No8

ENERGYMACHINERY KOREA

Risk-Adjusted Performance

4 of 100

Insignificant

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

Daishin Balance No8

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Daishin Balance No8 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with ENERGYMACHINERY KOREA and Daishin Balance

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

The idea behind ENERGYMACHINERY KOREA CoLtd and Daishin Balance No8 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 CEOs Directory module to screen CEOs from public companies around the world.