Correlation Between Chinyang Hold and Duksan Hi

Can any of the company-specific risk be diversified away by investing in both Chinyang Hold and Duksan Hi 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 Chinyang Hold and Duksan Hi into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chinyang Hold and Duksan Hi Metal, you can compare the effects of market volatilities on Chinyang Hold and Duksan Hi 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 Chinyang Hold with a short position of Duksan Hi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chinyang Hold and Duksan Hi.

Diversification Opportunities for Chinyang Hold and Duksan Hi

0.27

Correlation Coefficient

Chinyang Hold  Duksan Hi

Modest diversification

The 3 months correlation between Chinyang and Duksan is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Chinyang Hold and Duksan Hi Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duksan Hi Metal and Chinyang Hold 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 Chinyang Hold are associated (or correlated) with Duksan Hi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Duksan Hi Metal has no effect on the direction of Chinyang Hold i.e., Chinyang Hold and Duksan Hi go up and down completely randomly.

Pair Corralation between Chinyang Hold and Duksan Hi

Assuming the 90 days trading horizon Chinyang Hold is expected to under-perform the Duksan Hi. But the stock apears to be less risky and, when comparing its historical volatility, Chinyang Hold is 2.9 times less risky than Duksan Hi. The stock trades about -0.44 of its potential returns per unit of risk. The Duksan Hi Metal is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  392,000  in Duksan Hi Metal on October 22, 2024 and sell it today you would earn a total of  11,000  from holding Duksan Hi Metal or generate 2.81% return on investment over 90 days.

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

Chinyang Hold  vs.  Duksan Hi Metal

Chinyang Hold

Risk-Adjusted Performance

0 of 100

Very Weak

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

Duksan Hi Metal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Duksan Hi Metal has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Chinyang Hold and Duksan Hi

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

The idea behind Chinyang Hold and Duksan Hi Metal 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.