Correlation Between Daesung Hi and Anam Electronics

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

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

Diversification Opportunities for Daesung Hi and Anam Electronics

-0.04

Correlation Coefficient

Daesung Hi  Anam Electronics

Good diversification

The 3 months correlation between Daesung and Anam is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Daesung Hi Tech Co and Anam Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anam Electronics and Daesung Hi 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 Hi Tech Co are associated (or correlated) with Anam Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anam Electronics has no effect on the direction of Daesung Hi i.e., Daesung Hi and Anam Electronics go up and down completely randomly.

Pair Corralation between Daesung Hi and Anam Electronics

Assuming the 90 days trading horizon Daesung Hi Tech Co is expected to generate 1.14 times more return on investment than Anam Electronics. However, Daesung Hi is 1.14 times more volatile than Anam Electronics Co. It trades about 0.1 of its potential returns per unit of risk. Anam Electronics Co is currently generating about 0.08 per unit of risk. If you would invest  338,000  in Daesung Hi Tech Co on December 23, 2024 and sell it today you would earn a total of  82,000  from holding Daesung Hi Tech Co or generate 24.26% return on investment over 90 days.

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

Daesung Hi Tech Co  vs.  Anam Electronics Co

Daesung Hi Tech

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Daesung Hi Tech Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Daesung Hi sustained solid returns over the last few months and may actually be approaching a breakup point.

Anam Electronics

Risk-Adjusted Performance

Modest

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

Pair Trading with Daesung Hi and Anam Electronics

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

The idea behind Daesung Hi Tech Co and Anam Electronics Co 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.