Correlation Between Dong Il and Wireless Power
Can any of the company-specific risk be diversified away by investing in both Dong Il and Wireless Power 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 Dong Il and Wireless Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dong Il Steel and Wireless Power Amplifier, you can compare the effects of market volatilities on Dong Il and Wireless Power 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 Dong Il with a short position of Wireless Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dong Il and Wireless Power.
Diversification Opportunities for Dong Il and Wireless Power
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dong and Wireless is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Dong Il Steel and Wireless Power Amplifier in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wireless Power Amplifier and Dong Il 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 Dong Il Steel are associated (or correlated) with Wireless Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wireless Power Amplifier has no effect on the direction of Dong Il i.e., Dong Il and Wireless Power go up and down completely randomly.
Pair Corralation between Dong Il and Wireless Power
Assuming the 90 days trading horizon Dong Il Steel is expected to generate 1.46 times more return on investment than Wireless Power. However, Dong Il is 1.46 times more volatile than Wireless Power Amplifier. It trades about -0.13 of its potential returns per unit of risk. Wireless Power Amplifier is currently generating about -0.21 per unit of risk. If you would invest 158,200 in Dong Il Steel on September 3, 2024 and sell it today you would lose (23,600) from holding Dong Il Steel or give up 14.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dong Il Steel vs. Wireless Power Amplifier
Performance |
| Timeline |
| Dong Il Steel |
| Wireless Power Amplifier |
Dong Il and Wireless Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dong Il and Wireless Power
The main advantage of trading using opposite Dong Il and Wireless Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dong Il position performs unexpectedly, Wireless Power 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 Wireless Power will offset losses from the drop in Wireless Power's long position.The idea behind Dong Il Steel and Wireless Power Amplifier 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.| Wireless Power vs. Daejoo Electronic Materials | Wireless Power vs. Parksystems Corp | Wireless Power vs. BH Co | Wireless Power vs. Partron 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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