Correlation Between DAEMO Engineering and Haisung TPC

Can any of the company-specific risk be diversified away by investing in both DAEMO Engineering and Haisung TPC 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 DAEMO Engineering and Haisung TPC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DAEMO Engineering Co and Haisung TPC Co, you can compare the effects of market volatilities on DAEMO Engineering and Haisung TPC 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 DAEMO Engineering with a short position of Haisung TPC. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAEMO Engineering and Haisung TPC.

Diversification Opportunities for DAEMO Engineering and Haisung TPC

-0.26

Correlation Coefficient

DAEMO Engineering  Haisung TPC

Very good diversification

The 3 months correlation between DAEMO and Haisung is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding DAEMO Engineering Co and Haisung TPC Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haisung TPC and DAEMO Engineering 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 DAEMO Engineering Co are associated (or correlated) with Haisung TPC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haisung TPC has no effect on the direction of DAEMO Engineering i.e., DAEMO Engineering and Haisung TPC go up and down completely randomly.

Pair Corralation between DAEMO Engineering and Haisung TPC

Assuming the 90 days trading horizon DAEMO Engineering is expected to generate 1.59 times less return on investment than Haisung TPC. But when comparing it to its historical volatility, DAEMO Engineering Co is 1.85 times less risky than Haisung TPC. It trades about 0.02 of its potential returns per unit of risk. Haisung TPC Co is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  644,000  in Haisung TPC Co on September 4, 2024 and sell it today you would lose (139,000) from holding Haisung TPC Co or give up 21.58% of portfolio value over 90 days.

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

DAEMO Engineering Co  vs.  Haisung TPC Co

DAEMO Engineering

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DAEMO Engineering Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, DAEMO Engineering is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Haisung TPC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Haisung TPC 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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with DAEMO Engineering and Haisung TPC

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

The idea behind DAEMO Engineering Co and Haisung TPC 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.