Correlation Between DAEDUCK ELECTRONICS and Next Bt

Can any of the company-specific risk be diversified away by investing in both DAEDUCK ELECTRONICS and Next Bt 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 DAEDUCK ELECTRONICS and Next Bt into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DAEDUCK ELECTRONICS CoLtd and Next Bt Co, you can compare the effects of market volatilities on DAEDUCK ELECTRONICS and Next Bt 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 DAEDUCK ELECTRONICS with a short position of Next Bt. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAEDUCK ELECTRONICS and Next Bt.

Diversification Opportunities for DAEDUCK ELECTRONICS and Next Bt

-0.05

Correlation Coefficient

DAEDUCK ELECTRONICS  Next Bt

Good diversification

The 3 months correlation between DAEDUCK and Next is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding DAEDUCK ELECTRONICS CoLtd and Next Bt Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Next Bt and DAEDUCK ELECTRONICS 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 DAEDUCK ELECTRONICS CoLtd are associated (or correlated) with Next Bt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Next Bt has no effect on the direction of DAEDUCK ELECTRONICS i.e., DAEDUCK ELECTRONICS and Next Bt go up and down completely randomly.

Pair Corralation between DAEDUCK ELECTRONICS and Next Bt

Assuming the 90 days trading horizon DAEDUCK ELECTRONICS is expected to generate 43.36 times less return on investment than Next Bt. But when comparing it to its historical volatility, DAEDUCK ELECTRONICS CoLtd is 10.91 times less risky than Next Bt. It trades about 0.04 of its potential returns per unit of risk. Next Bt Co is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  78,667  in Next Bt Co on December 24, 2024 and sell it today you would earn a total of  63,833  from holding Next Bt Co or generate 81.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	85.96%
Values	Daily Returns

DAEDUCK ELECTRONICS CoLtd  vs.  Next Bt Co

DAEDUCK ELECTRONICS CoLtd

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in DAEDUCK ELECTRONICS CoLtd are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, DAEDUCK ELECTRONICS is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Next Bt

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Next Bt Co are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Next Bt sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DAEDUCK ELECTRONICS and Next Bt

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

The idea behind DAEDUCK ELECTRONICS CoLtd and Next Bt 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.