Correlation Between HJ ShipBuilding and Daekyung Machinery
Can any of the company-specific risk be diversified away by investing in both HJ ShipBuilding and Daekyung Machinery 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 HJ ShipBuilding and Daekyung Machinery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HJ ShipBuilding Construction and Daekyung Machinery Engineering, you can compare the effects of market volatilities on HJ ShipBuilding and Daekyung Machinery 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 HJ ShipBuilding with a short position of Daekyung Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of HJ ShipBuilding and Daekyung Machinery.
Diversification Opportunities for HJ ShipBuilding and Daekyung Machinery
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 097230 and Daekyung is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding HJ ShipBuilding Construction and Daekyung Machinery Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daekyung Machinery and HJ ShipBuilding 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 HJ ShipBuilding Construction are associated (or correlated) with Daekyung Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daekyung Machinery has no effect on the direction of HJ ShipBuilding i.e., HJ ShipBuilding and Daekyung Machinery go up and down completely randomly.
Pair Corralation between HJ ShipBuilding and Daekyung Machinery
Assuming the 90 days trading horizon HJ ShipBuilding Construction is expected to generate 1.69 times more return on investment than Daekyung Machinery. However, HJ ShipBuilding is 1.69 times more volatile than Daekyung Machinery Engineering. It trades about 0.11 of its potential returns per unit of risk. Daekyung Machinery Engineering is currently generating about 0.16 per unit of risk. If you would invest 270,000 in HJ ShipBuilding Construction on September 12, 2024 and sell it today you would earn a total of 76,000 from holding HJ ShipBuilding Construction or generate 28.15% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 84.48% |
Values | Daily Returns |
HJ ShipBuilding Construction vs. Daekyung Machinery Engineering
Performance |
Timeline |
HJ ShipBuilding Cons |
Daekyung Machinery |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
HJ ShipBuilding and Daekyung Machinery Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with HJ ShipBuilding and Daekyung Machinery
The main advantage of trading using opposite HJ ShipBuilding and Daekyung Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HJ ShipBuilding position performs unexpectedly, Daekyung Machinery 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 Daekyung Machinery will offset losses from the drop in Daekyung Machinery's long position.HJ ShipBuilding vs. Korea New Network | HJ ShipBuilding vs. Solution Advanced Technology | HJ ShipBuilding vs. Busan Industrial Co | HJ ShipBuilding vs. Busan Ind |
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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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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