Correlation Between Daewoo SBI and Puloon Technology

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

By analyzing existing cross correlation between Daewoo SBI SPAC and Puloon Technology, you can compare the effects of market volatilities on Daewoo SBI 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 Daewoo SBI with a short position of Puloon Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daewoo SBI and Puloon Technology.

Diversification Opportunities for Daewoo SBI and Puloon Technology

0.79

Correlation Coefficient

Daewoo SBI  Puloon Technology

Poor diversification

The 3 months correlation between Daewoo and Puloon is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Daewoo SBI SPAC and Puloon Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Puloon Technology and Daewoo SBI 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 Daewoo SBI SPAC 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 Daewoo SBI i.e., Daewoo SBI and Puloon Technology go up and down completely randomly.

Pair Corralation between Daewoo SBI and Puloon Technology

Assuming the 90 days trading horizon Daewoo SBI is expected to generate 1.74 times less return on investment than Puloon Technology. In addition to that, Daewoo SBI is 1.24 times more volatile than Puloon Technology. It trades about 0.11 of its total potential returns per unit of risk. Puloon Technology is currently generating about 0.24 per unit of volatility. If you would invest  699,921  in Puloon Technology on October 22, 2024 and sell it today you would earn a total of  57,079  from holding Puloon Technology or generate 8.16% return on investment over 90 days.

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

Daewoo SBI SPAC  vs.  Puloon Technology

Daewoo SBI SPAC

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Daewoo SBI SPAC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Daewoo SBI sustained solid returns over the last few months and may actually be approaching a breakup point.

Puloon Technology

Risk-Adjusted Performance

8 of 100

OK

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

Pair Trading with Daewoo SBI and Puloon Technology

The main advantage of trading using opposite Daewoo SBI and Puloon Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daewoo SBI 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 Daewoo SBI SPAC 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.

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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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.