Correlation Between SH Energy and Dongnam Chemical
Can any of the company-specific risk be diversified away by investing in both SH Energy and Dongnam Chemical 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 SH Energy and Dongnam Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SH Energy Chemical and Dongnam Chemical Co, you can compare the effects of market volatilities on SH Energy and Dongnam Chemical 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 SH Energy with a short position of Dongnam Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of SH Energy and Dongnam Chemical.
Diversification Opportunities for SH Energy and Dongnam Chemical
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between 002360 and Dongnam is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding SH Energy Chemical and Dongnam Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongnam Chemical and SH Energy 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 SH Energy Chemical are associated (or correlated) with Dongnam Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongnam Chemical has no effect on the direction of SH Energy i.e., SH Energy and Dongnam Chemical go up and down completely randomly.
Pair Corralation between SH Energy and Dongnam Chemical
Assuming the 90 days trading horizon SH Energy is expected to generate 1.93 times less return on investment than Dongnam Chemical. In addition to that, SH Energy is 1.56 times more volatile than Dongnam Chemical Co. It trades about 0.15 of its total potential returns per unit of risk. Dongnam Chemical Co is currently generating about 0.44 per unit of volatility. If you would invest 3,145,000 in Dongnam Chemical Co on October 22, 2024 and sell it today you would earn a total of 280,000 from holding Dongnam Chemical Co or generate 8.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SH Energy Chemical vs. Dongnam Chemical Co
Performance |
| Timeline |
| SH Energy Chemical |
| Dongnam Chemical |
SH Energy and Dongnam Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SH Energy and Dongnam Chemical
The main advantage of trading using opposite SH Energy and Dongnam Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SH Energy position performs unexpectedly, Dongnam Chemical 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 Dongnam Chemical will offset losses from the drop in Dongnam Chemical's long position.| SH Energy vs. Tway Air Co | SH Energy vs. CU Tech Corp | SH Energy vs. Lion Chemtech Co | SH Energy vs. SS TECH |
| Dongnam Chemical vs. Lotte Data Communication | Dongnam Chemical vs. Jeju Beer Co | Dongnam Chemical vs. Sungmoon Electronics Co | Dongnam Chemical vs. PJ Electronics Co |
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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