Correlation Between DAEDUCK ELECTRONICS and Nature

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

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

Diversification Opportunities for DAEDUCK ELECTRONICS and Nature

0.81

Correlation Coefficient

DAEDUCK ELECTRONICS  Nature

Very poor diversification

The 3 months correlation between DAEDUCK and Nature is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding DAEDUCK ELECTRONICS CoLtd and Nature and Environment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nature and Environment and DAEDUCK ELECTRONICS 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 DAEDUCK ELECTRONICS CoLtd are associated (or correlated) with Nature. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nature and Environment has no effect on the direction of DAEDUCK ELECTRONICS i.e., DAEDUCK ELECTRONICS and Nature go up and down completely randomly.

Pair Corralation between DAEDUCK ELECTRONICS and Nature

Assuming the 90 days trading horizon DAEDUCK ELECTRONICS is expected to generate 2.15 times less return on investment than Nature. But when comparing it to its historical volatility, DAEDUCK ELECTRONICS CoLtd is 1.23 times less risky than Nature. It trades about 0.06 of its potential returns per unit of risk. Nature and Environment is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  59,000  in Nature and Environment on September 21, 2024 and sell it today you would earn a total of  3,800  from holding Nature and Environment or generate 6.44% return on investment over 90 days.

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

DAEDUCK ELECTRONICS CoLtd  vs.  Nature and Environment

DAEDUCK ELECTRONICS CoLtd

Risk-Adjusted Performance

0 of 100

Very Weak

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

Nature and Environment

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with DAEDUCK ELECTRONICS and Nature

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

The idea behind DAEDUCK ELECTRONICS CoLtd and Nature and Environment 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.