Correlation Between Astar and Daesung Eltec

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

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

Diversification Opportunities for Astar and Daesung Eltec

-0.48

Correlation Coefficient

Astar  Daesung Eltec

Very good diversification

The 3 months correlation between Astar and Daesung is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Astar and Daesung Eltec Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daesung Eltec and Astar 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 Astar are associated (or correlated) with Daesung Eltec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daesung Eltec has no effect on the direction of Astar i.e., Astar and Daesung Eltec go up and down completely randomly.

Pair Corralation between Astar and Daesung Eltec

Assuming the 90 days trading horizon Astar is expected to generate 2.76 times more return on investment than Daesung Eltec. However, Astar is 2.76 times more volatile than Daesung Eltec Co. It trades about 0.03 of its potential returns per unit of risk. Daesung Eltec Co is currently generating about -0.07 per unit of risk. If you would invest  5.95  in Astar on October 24, 2024 and sell it today you would lose (0.43) from holding Astar or give up 7.23% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	68.28%
Values	Daily Returns

Astar  vs.  Daesung Eltec Co

Astar

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Astar are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Astar may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Daesung Eltec

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Astar and Daesung Eltec

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

The idea behind Astar and Daesung Eltec 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.

Check out your portfolio center.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.