Correlation Between Daesung Industrial and Snet Systems

Can any of the company-specific risk be diversified away by investing in both Daesung Industrial and Snet Systems 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 Daesung Industrial and Snet Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Daesung Industrial Co and Snet systems, you can compare the effects of market volatilities on Daesung Industrial and Snet Systems 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 Daesung Industrial with a short position of Snet Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daesung Industrial and Snet Systems.

Diversification Opportunities for Daesung Industrial and Snet Systems

-0.44

Correlation Coefficient

Daesung Industrial  Snet Systems

Very good diversification

The 3 months correlation between Daesung and Snet is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Daesung Industrial Co and Snet systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Snet systems and Daesung Industrial 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 Daesung Industrial Co are associated (or correlated) with Snet Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Snet systems has no effect on the direction of Daesung Industrial i.e., Daesung Industrial and Snet Systems go up and down completely randomly.

Pair Corralation between Daesung Industrial and Snet Systems

Assuming the 90 days trading horizon Daesung Industrial Co is expected to under-perform the Snet Systems. But the stock apears to be less risky and, when comparing its historical volatility, Daesung Industrial Co is 1.05 times less risky than Snet Systems. The stock trades about -0.01 of its potential returns per unit of risk. The Snet systems is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  596,942  in Snet systems on October 22, 2024 and sell it today you would lose (161,942) from holding Snet systems or give up 27.13% of portfolio value over 90 days.

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

Daesung Industrial Co  vs.  Snet systems

Daesung Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Daesung Industrial Co 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.

Snet systems

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Snet systems are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Snet Systems sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Daesung Industrial and Snet Systems

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

The idea behind Daesung Industrial Co and Snet systems 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.