Correlation Between Daehan Synthetic and Daol Investment

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Can any of the company-specific risk be diversified away by investing in both Daehan Synthetic and Daol Investment 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 Daehan Synthetic and Daol Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daehan Synthetic Fiber and Daol Investment Securities, you can compare the effects of market volatilities on Daehan Synthetic and Daol Investment 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 Daehan Synthetic with a short position of Daol Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daehan Synthetic and Daol Investment.

Diversification Opportunities for Daehan Synthetic and Daol Investment

0.27
  Correlation Coefficient

Modest diversification

The 3 months correlation between Daehan and Daol is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Daehan Synthetic Fiber and Daol Investment Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daol Investment Secu and Daehan Synthetic 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 Daehan Synthetic Fiber are associated (or correlated) with Daol Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daol Investment Secu has no effect on the direction of Daehan Synthetic i.e., Daehan Synthetic and Daol Investment go up and down completely randomly.

Pair Corralation between Daehan Synthetic and Daol Investment

Assuming the 90 days trading horizon Daehan Synthetic is expected to generate 4.32 times less return on investment than Daol Investment. But when comparing it to its historical volatility, Daehan Synthetic Fiber is 1.9 times less risky than Daol Investment. It trades about 0.01 of its potential returns per unit of risk. Daol Investment Securities is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  304,500  in Daol Investment Securities on September 23, 2024 and sell it today you would earn a total of  3,000  from holding Daol Investment Securities or generate 0.99% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Daehan Synthetic Fiber  vs.  Daol Investment Securities

 Performance 
       Timeline  
Daehan Synthetic Fiber 

Risk-Adjusted Performance

0 of 100

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

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Daol Investment Securities are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Daol Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Daehan Synthetic and Daol Investment Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Daehan Synthetic and Daol Investment

The main advantage of trading using opposite Daehan Synthetic and Daol Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daehan Synthetic position performs unexpectedly, Daol Investment 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 Daol Investment will offset losses from the drop in Daol Investment's long position.
The idea behind Daehan Synthetic Fiber and Daol Investment Securities 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 Anywhere module to track or share privately all of your investments from the convenience of any device.

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