Correlation Between Daesung Hi and Raphas

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

Diversification Opportunities for Daesung Hi and Raphas

0.64

Correlation Coefficient

Daesung Hi  Raphas

Poor diversification

The 3 months correlation between Daesung and Raphas is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Daesung Hi Tech Co and Raphas Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raphas 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 Raphas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raphas has no effect on the direction of Daesung Hi i.e., Daesung Hi and Raphas go up and down completely randomly.

Pair Corralation between Daesung Hi and Raphas

Assuming the 90 days trading horizon Daesung Hi Tech Co is expected to under-perform the Raphas. But the stock apears to be less risky and, when comparing its historical volatility, Daesung Hi Tech Co is 1.83 times less risky than Raphas. The stock trades about -0.16 of its potential returns per unit of risk. The Raphas Co is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,488,000  in Raphas Co on October 20, 2024 and sell it today you would lose (3,000) from holding Raphas Co or give up 0.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.0%
Values	Daily Returns

Daesung Hi Tech Co  vs.  Raphas Co

Daesung Hi Tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Daesung Hi Tech Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Raphas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Raphas Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Daesung Hi and Raphas

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

The idea behind Daesung Hi Tech Co and Raphas 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.

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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.