Correlation Between Daesung Industrial and Puloon Technology

Can any of the company-specific risk be diversified away by investing in both Daesung Industrial and Puloon Technology 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 Puloon Technology 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 Puloon Technology, you can compare the effects of market volatilities on Daesung Industrial and Puloon Technology 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 Puloon Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daesung Industrial and Puloon Technology.

Diversification Opportunities for Daesung Industrial and Puloon Technology

-0.18

Correlation Coefficient

Daesung Industrial  Puloon Technology

Good diversification

The 3 months correlation between Daesung and Puloon is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Daesung Industrial Co and Puloon Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Puloon Technology 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 Puloon Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Puloon Technology has no effect on the direction of Daesung Industrial i.e., Daesung Industrial and Puloon Technology go up and down completely randomly.

Pair Corralation between Daesung Industrial and Puloon Technology

Assuming the 90 days trading horizon Daesung Industrial Co is expected to generate 1.08 times more return on investment than Puloon Technology. However, Daesung Industrial is 1.08 times more volatile than Puloon Technology. It trades about 0.05 of its potential returns per unit of risk. Puloon Technology is currently generating about 0.02 per unit of risk. If you would invest  327,000  in Daesung Industrial Co on December 25, 2024 and sell it today you would earn a total of  15,500  from holding Daesung Industrial Co or generate 4.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.25%
Values	Daily Returns

Daesung Industrial Co  vs.  Puloon Technology

Daesung Industrial

Risk-Adjusted Performance

Insignificant

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

Puloon Technology

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Puloon Technology are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Puloon Technology is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Daesung Industrial and Puloon Technology

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

The idea behind Daesung Industrial Co and Puloon Technology 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.

Check out your portfolio center.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.