Correlation Between Daelim Trading and SBI Investment

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

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

Diversification Opportunities for Daelim Trading and SBI Investment

0.54

Correlation Coefficient

Daelim Trading  SBI Investment

Very weak diversification

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

Pair Corralation between Daelim Trading and SBI Investment

Assuming the 90 days trading horizon Daelim Trading Co is expected to under-perform the SBI Investment. But the stock apears to be less risky and, when comparing its historical volatility, Daelim Trading Co is 1.06 times less risky than SBI Investment. The stock trades about -0.02 of its potential returns per unit of risk. The SBI Investment KOREA is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  75,200  in SBI Investment KOREA on September 2, 2024 and sell it today you would lose (2,300) from holding SBI Investment KOREA or give up 3.06% of portfolio value over 90 days.

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

Daelim Trading Co  vs.  SBI Investment KOREA

Daelim Trading

Risk-Adjusted Performance

0 of 100

Very Weak

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

SBI Investment KOREA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Daelim Trading and SBI Investment

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

The idea behind Daelim Trading Co and SBI Investment KOREA 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.