Correlation Between DAEDUCK ELECTRONICS and Mobile Appliance

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

Diversification Opportunities for DAEDUCK ELECTRONICS and Mobile Appliance

0.54

Correlation Coefficient

DAEDUCK ELECTRONICS  Mobile Appliance

Very weak diversification

The 3 months correlation between DAEDUCK and Mobile is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding DAEDUCK ELECTRONICS CoLtd and Mobile Appliance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mobile Appliance 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 Mobile Appliance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mobile Appliance has no effect on the direction of DAEDUCK ELECTRONICS i.e., DAEDUCK ELECTRONICS and Mobile Appliance go up and down completely randomly.

Pair Corralation between DAEDUCK ELECTRONICS and Mobile Appliance

Assuming the 90 days trading horizon DAEDUCK ELECTRONICS CoLtd is expected to generate 0.61 times more return on investment than Mobile Appliance. However, DAEDUCK ELECTRONICS CoLtd is 1.63 times less risky than Mobile Appliance. It trades about 0.04 of its potential returns per unit of risk. Mobile Appliance is currently generating about 0.0 per unit of risk. If you would invest  793,000  in DAEDUCK ELECTRONICS CoLtd on December 25, 2024 and sell it today you would earn a total of  17,000  from holding DAEDUCK ELECTRONICS CoLtd or generate 2.14% return on investment over 90 days.

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

DAEDUCK ELECTRONICS CoLtd  vs.  Mobile Appliance

DAEDUCK ELECTRONICS CoLtd

Risk-Adjusted Performance

Insignificant

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.

Mobile Appliance

Risk-Adjusted Performance

Very Weak

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

Pair Trading with DAEDUCK ELECTRONICS and Mobile Appliance

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

The idea behind DAEDUCK ELECTRONICS CoLtd and Mobile Appliance 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.