Correlation Between DAEDUCK ELECTRONICS and Iljin Display

Can any of the company-specific risk be diversified away by investing in both DAEDUCK ELECTRONICS and Iljin Display 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 Iljin Display 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 Iljin Display, you can compare the effects of market volatilities on DAEDUCK ELECTRONICS and Iljin Display 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 Iljin Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAEDUCK ELECTRONICS and Iljin Display.

Diversification Opportunities for DAEDUCK ELECTRONICS and Iljin Display

0.22

Correlation Coefficient

DAEDUCK ELECTRONICS  Iljin Display

Modest diversification

The 3 months correlation between DAEDUCK and Iljin is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding DAEDUCK ELECTRONICS CoLtd and Iljin Display in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iljin Display 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 Iljin Display. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iljin Display has no effect on the direction of DAEDUCK ELECTRONICS i.e., DAEDUCK ELECTRONICS and Iljin Display go up and down completely randomly.

Pair Corralation between DAEDUCK ELECTRONICS and Iljin Display

Assuming the 90 days trading horizon DAEDUCK ELECTRONICS CoLtd is expected to under-perform the Iljin Display. But the stock apears to be less risky and, when comparing its historical volatility, DAEDUCK ELECTRONICS CoLtd is 3.55 times less risky than Iljin Display. The stock trades about -0.04 of its potential returns per unit of risk. The Iljin Display is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  99,000  in Iljin Display on March 4, 2024 and sell it today you would earn a total of  30,700  from holding Iljin Display or generate 31.01% return on investment over 90 days.

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

DAEDUCK ELECTRONICS CoLtd  vs.  Iljin Display

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.

Iljin Display

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Iljin Display are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Iljin Display sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DAEDUCK ELECTRONICS and Iljin Display

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

The idea behind DAEDUCK ELECTRONICS CoLtd and Iljin Display 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.