Correlation Between Chorokbaem Healthcare and Daewoo Engineering

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

By analyzing existing cross correlation between Chorokbaem Healthcare Co and Daewoo Engineering Construction, you can compare the effects of market volatilities on Chorokbaem Healthcare and Daewoo Engineering 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 Chorokbaem Healthcare with a short position of Daewoo Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chorokbaem Healthcare and Daewoo Engineering.

Diversification Opportunities for Chorokbaem Healthcare and Daewoo Engineering

0.42

Correlation Coefficient

Chorokbaem Healthcare  Daewoo Engineering

Very weak diversification

The 3 months correlation between Chorokbaem and Daewoo is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Chorokbaem Healthcare Co and Daewoo Engineering Constructio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daewoo Engineering and Chorokbaem Healthcare 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 Chorokbaem Healthcare Co are associated (or correlated) with Daewoo Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daewoo Engineering has no effect on the direction of Chorokbaem Healthcare i.e., Chorokbaem Healthcare and Daewoo Engineering go up and down completely randomly.

Pair Corralation between Chorokbaem Healthcare and Daewoo Engineering

Assuming the 90 days trading horizon Chorokbaem Healthcare Co is expected to generate 1.26 times more return on investment than Daewoo Engineering. However, Chorokbaem Healthcare is 1.26 times more volatile than Daewoo Engineering Construction. It trades about -0.03 of its potential returns per unit of risk. Daewoo Engineering Construction is currently generating about -0.05 per unit of risk. If you would invest  33,800  in Chorokbaem Healthcare Co on October 27, 2024 and sell it today you would lose (2,400) from holding Chorokbaem Healthcare Co or give up 7.1% of portfolio value over 90 days.

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

Chorokbaem Healthcare Co  vs.  Daewoo Engineering Constructio

Chorokbaem Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

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

Daewoo Engineering

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Daewoo Engineering Construction 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 Chorokbaem Healthcare and Daewoo Engineering

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

The idea behind Chorokbaem Healthcare Co and Daewoo Engineering Construction 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.