Correlation Between Aminologics CoLtd and Daihan Pharmaceutical

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

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

Diversification Opportunities for Aminologics CoLtd and Daihan Pharmaceutical

0.14

Correlation Coefficient

Aminologics CoLtd  Daihan Pharmaceutical

Average diversification

The 3 months correlation between Aminologics and Daihan is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Aminologics CoLtd and Daihan Pharmaceutical CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daihan Pharmaceutical and Aminologics CoLtd 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 Aminologics CoLtd are associated (or correlated) with Daihan Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daihan Pharmaceutical has no effect on the direction of Aminologics CoLtd i.e., Aminologics CoLtd and Daihan Pharmaceutical go up and down completely randomly.

Pair Corralation between Aminologics CoLtd and Daihan Pharmaceutical

Assuming the 90 days trading horizon Aminologics CoLtd is expected to under-perform the Daihan Pharmaceutical. In addition to that, Aminologics CoLtd is 2.12 times more volatile than Daihan Pharmaceutical CoLtd. It trades about -0.13 of its total potential returns per unit of risk. Daihan Pharmaceutical CoLtd is currently generating about 0.06 per unit of volatility. If you would invest  2,635,000  in Daihan Pharmaceutical CoLtd on August 31, 2024 and sell it today you would earn a total of  90,000  from holding Daihan Pharmaceutical CoLtd or generate 3.42% return on investment over 90 days.

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

Aminologics CoLtd  vs.  Daihan Pharmaceutical CoLtd

Aminologics CoLtd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aminologics CoLtd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Daihan Pharmaceutical

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Daihan Pharmaceutical CoLtd are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Daihan Pharmaceutical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Aminologics CoLtd and Daihan Pharmaceutical

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

The idea behind Aminologics CoLtd and Daihan Pharmaceutical CoLtd 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.