Correlation Between N Citron and Daejoo Electronic

Can any of the company-specific risk be diversified away by investing in both N Citron and Daejoo Electronic 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 N Citron and Daejoo Electronic into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between N Citron and Daejoo Electronic Materials, you can compare the effects of market volatilities on N Citron and Daejoo Electronic 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 N Citron with a short position of Daejoo Electronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of N Citron and Daejoo Electronic.

Diversification Opportunities for N Citron and Daejoo Electronic

-0.14

Correlation Coefficient

N Citron  Daejoo Electronic

Good diversification

The 3 months correlation between 101400 and Daejoo is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding N Citron and Daejoo Electronic Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daejoo Electronic and N Citron 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 N Citron are associated (or correlated) with Daejoo Electronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daejoo Electronic has no effect on the direction of N Citron i.e., N Citron and Daejoo Electronic go up and down completely randomly.

Pair Corralation between N Citron and Daejoo Electronic

Assuming the 90 days trading horizon N Citron is expected to generate 0.64 times more return on investment than Daejoo Electronic. However, N Citron is 1.56 times less risky than Daejoo Electronic. It trades about 0.14 of its potential returns per unit of risk. Daejoo Electronic Materials is currently generating about 0.08 per unit of risk. If you would invest  39,300  in N Citron on December 5, 2024 and sell it today you would earn a total of  8,700  from holding N Citron or generate 22.14% return on investment over 90 days.

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

N Citron  vs.  Daejoo Electronic Materials

N Citron

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in N Citron are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, N Citron sustained solid returns over the last few months and may actually be approaching a breakup point.

Daejoo Electronic

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Daejoo Electronic Materials are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Daejoo Electronic sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with N Citron and Daejoo Electronic

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

The idea behind N Citron and Daejoo Electronic Materials 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.