Correlation Between Daesung Hi-Tech and Display Tech
Can any of the company-specific risk be diversified away by investing in both Daesung Hi-Tech and Display Tech 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 Daesung Hi-Tech and Display Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daesung Hi Tech Co and Display Tech Co, you can compare the effects of market volatilities on Daesung Hi-Tech and Display Tech 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 Daesung Hi-Tech with a short position of Display Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daesung Hi-Tech and Display Tech.
Diversification Opportunities for Daesung Hi-Tech and Display Tech
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Daesung and Display is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Daesung Hi Tech Co and Display Tech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Display Tech and Daesung Hi-Tech 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 Daesung Hi Tech Co are associated (or correlated) with Display Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Display Tech has no effect on the direction of Daesung Hi-Tech i.e., Daesung Hi-Tech and Display Tech go up and down completely randomly.
Pair Corralation between Daesung Hi-Tech and Display Tech
Assuming the 90 days trading horizon Daesung Hi Tech Co is expected to under-perform the Display Tech. In addition to that, Daesung Hi-Tech is 1.26 times more volatile than Display Tech Co. It trades about -0.15 of its total potential returns per unit of risk. Display Tech Co is currently generating about -0.12 per unit of volatility. If you would invest 349,500 in Display Tech Co on September 25, 2024 and sell it today you would lose (55,500) from holding Display Tech Co or give up 15.88% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Daesung Hi Tech Co vs. Display Tech Co
Performance |
Timeline |
Daesung Hi Tech |
Display Tech |
Daesung Hi-Tech and Display Tech Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Daesung Hi-Tech and Display Tech
The main advantage of trading using opposite Daesung Hi-Tech and Display Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daesung Hi-Tech position performs unexpectedly, Display Tech 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 Display Tech will offset losses from the drop in Display Tech's long position.Daesung Hi-Tech vs. Samsung Electronics Co | Daesung Hi-Tech vs. Samsung Electronics Co | Daesung Hi-Tech vs. LG Energy Solution | Daesung Hi-Tech vs. SK Hynix |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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